5 things that stood out
On Sunday August 14, something awesome happened. On his show Last Week Tonight, John Oliver took on the auto-lending industry … hard. If you’ve ever wanted raw and honest insight into why we do what we do, look no further. Oliver really nails it, standing up for those whose voices need to to be heard and whose stories are all too common.
We can’t stop thinking about this awesome piece, so we thought we’d share 5 things that stood out to us while we watched.
1. Most Americans need cars OK, this is something we knew already. Not every city is equipped with a top-notch public transportation system. We see so many instances where a commute that should take less than 30 minutes takes hours because of sub-par public transportation options. Look no further than the recent Dallas Morning News article on Ms. Burch, whose commute to and from work is no longer 4 hours thanks to her new-to-her car.
2. Lenders target Individuals with poor credit Think about some of the commercials you see on TV for used cars, or even pay-day loans. Who are they talking to? They talk of no credit, poor credit, bankruptcy. That way they can hike up the interest rates. They act like they’re doing the buyer a favor. But in reality, they’re making money (and lots of it) off the buyer whether or not they can keep the payments up.
3. One car can have many owners Oliver cited a 2011 Los Angeles Times article, which investigated the journey of a 2003 Kia. They found that in three years, the car was owned by eight different people. On top of that, every time the car was resold, it was sold at a “price double or even triple its Blue Book value.” This leads us to the next point…
4. Defaulting: Bad for the buyer, good for the lender Defaulting means a car can be repossessed (or even turned off) at any time since the lender has total control of the vehicle. It’s obviously an awful thing for individuals and families who rely on cars for their livelihood. But, like we said before, all lenders have to do is get the car back and re-sell it. That means a new down payment, a higher-priced car and those same high interest rates. Defaulting means more money for the lender.
5. “…when you are poor, everything can be more expensive” This was a line in the piece that really stood out to us because of how true it really is. The idea of taking advantage of those among us who cannot afford it breaks our hearts. High interest rates means someone could end up paying more than $10,000 on a car that’s worth about half of that. In what world does that make sense? Not in ours, and that’s why we’re trying to change things.
If you have a little time, we encourage you to check out John Oliver’s piece on the auto-lending industry. He has some choice words in it (it is on HBO, after all), but like we said before it’s honest and raw. And as Newsweek said, “John Oliver is at his best when he is exposing industries that take advantage of lower-income Americans.” View the video below.
Los Angeles Times A vicious cycle in the used car business