By on September 16, 2016

2016 Nissan Altima SR

Dodge. Nissan. Kia. Mitsubishi. Ever wonder how any cars from these makes end up getting sold?

While there are certainly cars from these brands that attract the higher end of the automotive consumer marketplace (Hellcat, anyone?), the vast majority of the customers who end up in a car from one of these brands are in them for one reason, and one reason alone: they’ve got subprime credit. And they’re not alone.

In fact, over half of the American public now has subprime credit, and there’s no sign that it’s getting better any time soon. As a result, most customers are just walking into a dealership hoping to be approved for a loan. Instead of being in a position of power when it comes to negotiation, they’re in a position of weakness.

For dealers, this is great news. For consumers, it’s awful.

It’s why Nissan dealers are able to make significantly more money on both the front and back end of car deals than their counterparts at Honda and Toyota, and also how they’re able to compete on volume with cars that are — without a doubt — subpar in comparison to the competition. A Nissan Altima buyer is likely so happy that he has been approved to buy a brand-new car that he’s not focused on the overall purchase price at all. Instead, he’s focused on the payment. As long as the payment fits what the customer thinks he can afford, the dealer can make the purchase price whatever he wants. 

Having a buyer who is focused on payments is the best possible scenario for a dealership. Payment terms keep getting longer and longer as captive finance arms are now willing to go up to 84 months on relatively inexpensive cars. The longer the term, the more money is being paid in interest, even if the interest rates are low. The magic number for most buyers when it comes to payments is $300. So, as prices on cars go up, loans are just being extended to get buyers underneath that mark. 84 months means that you can get a Focus ST(!!) for less than $300 a month, which explains all the FoSTs parked behind restaurants and tire shops.

Dealerships can then prey upon the fears of the customer with extended warranty and gap insurance costs. Most customers don’t think of how much money they need to save for a rainy day, should their cars break down after the warranty expires — they just look at their paychecks and figure out what the maximum amount of car they can afford is. Dealers know this, and they put laminated, massive repair bills in front of customers.

“Could you afford this if it happened to you?” they say, executing a beautiful piece of cognitive dissonance. Our cars are great — but they could also have a catastrophic engine failure at 60,001 miles. Hello, extended warranty!

And then comes the gap. For buyers with subprime credit, gap insurance is often a condition forced upon the buyer by the lender — or the dealer just lies and says that it is. Imagine the gap insurance costs on an 84-month loan at $15 a month — that’s $1,200 or more over the term of the loan! The dealer typically makes 40-50 percent profit on gap insurance, so that’s another $600 in the pocket of the F&I guy. And he knows that he’s got an uninformed, scared buyer across the desk from him that he can force into a product.

So perhaps you’re thinking that you have no sympathy for these people — that they should educate themselves and not fall victim to such tactics. If you’re thinking that, then you truly have no idea how subprime people live.

They can’t get bank accounts. They can’t get approved for a cell phone. They had to put down massive deposits for their apartments, their utility bills. Everywhere they go, they have to pay more money just to enjoy worse service than prime customers. Paying more money for a car loan just seems like a normal thing for them. It’s incredibly expensive to be poor in this country.

So what can a subprime customer do to avoid this trap? They can pre-arrange financing before they show up, likely with a credit union or their own bank (if they have one). They can exercise a little bit more caution and buy a car with a payment that’s about $100 a month less than they think they can afford. They can do whatever they can to improve their credit, including calling creditors and negotiating a payment to pay whatever they can actually afford, so that their credit doesn’t continue to get worse.

Most importantly, whatever you do — pay your current car note on time. Or, at least don’t go 30 days past due on it. If you’ve shown the ability to pay your car on time, regardless of what the rest of your credit looks like, you can get a car loan at prime or near prime rates. There is such a thing as an “auto-adjusted” FICO score. Car lenders look at that score to determine your rate, not your overall FICO. If you have to let a bill slide because of a crisis, don’t let it be your car loan. Make sure it gets paid by Day 29, and you’ll always have access to a loan for a car.

But remember, even if you’re subprime, there are more customers like you than customers with “gold balls” credit. Don’t feel ashamed. You still have the right to negotiate your purchase price. If the Nissan dealer won’t budge, the Dodge dealer might. Don’t swallow whatever price they give you. While you need to buy a car, they need to sell it to you even more.

[Image: Nissan]

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228 Comments on “Bark’s Bites: Subprime Customers Don’t Get To Negotiate...”


  • avatar
    dwford

    I don’t feel too badly for subprime people. After all, if you go back far enough in their financial history, you can find the original sin that sent them down the road to credit ruin.

    I wish we would try even a little to teach financial management in high school. We could save a generation from credit misery and improve countless lives.

    • 0 avatar
      Alexdi

      Original sin: being born poor and dark. Very much in agreement on teaching finance.

      • 0 avatar

        Read J.D. Vance’s Hillbilly Elegy or the stuff Kevin Williamson has written about the social pathologies of the white underclass. Poverty isn’t about skin color, it’s about values.

        • 0 avatar
          FormerFF

          Also about bad opportunity.

          • 0 avatar
            danio3834

            People can be born into poverty in this country, but staying there for a lifetime involves making continual poor choices.

        • 0 avatar
          Alexdi

          Poverty is about a lot of things. Skin color is one of them. Values, definitely. But also things like your mother’s diet, exposure to lead paint, availability of food, and school quality.

          I’m sure that I could, in my current state, work my way out of poverty. I’m not so sure I could if I’d been formed by a lifetime of disadvantage.

        • 0 avatar
          psarhjinian

          “Poverty isn’t about skin color, it’s about values.”

          Uh huh, right. Poverty is about being poor. There are lots of reasons for it, but it usually comes down to one or more of happenstance and/or forethought, where “happenstance” often means being unfortunate enough to be born to the right, or wrong, parents.

          It’s never about “values” unless you’re trying to do post-hoc moralizing about why rich and poor people “deserve” their lot in life. Frankly, that’s revolting.

          • 0 avatar
            chuckrs

            psar

            I agree with you – restating, it is about values – your parent’s values. Some people have the ability to escape the worst effects of bad parenting, many don’t. And many of us here might not fare better had our parents routinely made bad lifestyle choices.

        • 0 avatar

          Not so much “values” as it is “culture.”

          Culture is pervasive and affects everything we do. The people you mention in your remarks farther down were able to recover from the terrible hardship they endured and become successful in life because of the culture of their class and family. They were raised with good values and a strong work ethic and, despite the fact that everything was stripped away from them and destroyed in the holocaust, they remained intellectually and cultural equipped for success. Once their situation changed, the prospered.

          JD Vance is talking about an entire culture of people broken by poverty. He is talking about the culture of social class, a culture of “red necks and hillbillies” that he is forever tied to no matter how far he has risen.

          I struggle with this every day and have come to believe that there is a “class ceiling.” While I may have the talent and intellectual ability to rise up through the social strata, at least economically, I am still bound by my working class roots. I regularly encounter social situations I am ill equipped to face. I just don’t see the cues that others do and will run headlong into difficulties that others can avoid with ease.

          I understand that people want to look down on poor Americans but, as a nation, we need to work to make their lives better. We should strive to help life all boats.

      • 0 avatar
        andyinatl

        Original sin is stupidity. To a degree i think race plays a role (very unfortunately), but up here north of Atlanta where i live, there are plenty of white folk with shiny new F-150s/RAMS/GMCs parked next to dilapidated trailers… When your car is more expensive than your house, there’s something wrong.

        • 0 avatar
          RHD

          Add a camper shell to that pickup, and it can be your house.

          (I have a co-worker who once did just that, and used his 24-hour gym membership for a place to park, and shave and shower the next morning. He did this for years… while dodging his creditors.)

          • 0 avatar
            Lorenzo

            Wasn’t there a story about a Silicon Valley worker who also did that? He wasn’t dodging creditors, though, he just couldn’t afford the living expenses at his salary.

          • 0 avatar
            HotPotato

            When buying a lovely used Euro wagon some years ago, I quipped that if the repair bills got too bad, I could always live in it instead of paying rent. I very nearly had to test that theory. Thanks, Bosch.

          • 0 avatar
            stuki

            Fresh out of college, I did a similar stint in a retired Cadillac hearse. Managed to talk my hours from 5×8 to 4×10, to 13, 13, 14. Showed up Tuesday morning, used the company’s onsite gym and shower facilities, and set up camp behind a bench in a locked server room, where no security guy dared tread. Then, Thursday evening, on to the beach. Which had shower facilities, restrooms and surf. Gambled the enforcers of the imbecile scumbag supported ban on taking a nap in what was once a free country, would be a bit more apprehensive about harassing a corpse than someone under a camper shell. I did consider getting a casket with some holes drilled, but even I have some shame….

            Lasted about a summer. Hearse was obviously retired for a reason, even corpses can’t expect to escape harassment in progressive dystopias, and I left for a startup with neither the anonymity nor sever room space of my former BigCorp employer. But at least I did get to play Dead man Surfing for a summer…..

          • 0 avatar
            Scoutdude

            My wife had a co-worker who was nearing retirement age and had bought his retirement home a several hour drive from the office. So he got an old pickup with a camper on it and a gym membership at a gym a mile or two from the office. He did the 4×10 thing and would head home for the 3 day weekend.

        • 0 avatar
          big al

          Up here on the North end of Vancouver Island I live in an old logging camp which switched over to village status. so there are some dilipidated trailers in the trailer park with brand new shiny trucks parked outside :)…slightly different circumstances,too, I might add. Actually I have a month old Cheby 4×4 parked outside too and a HD fr0m 2013 and while my house has a 2 year old roof and a freshly re-done kitchen, the truck and the bike outside are probably getting close in value to what i could actually sell the place for :) Like realtors say “Location,location,location” …..as i pointed out though, slightly different circumstances.

      • 0 avatar
        everybodyhatesscott

        If you can’t learn algebra, and a lot of people can’t, finance is probably out of reach too. A lot of middle class educated people barely got through their finance 101 class. Best advice I could give these people is find someone you trust who is good with numbers to help. I don’t know how people who prey on the weak sleep at night.

        • 0 avatar
          Alexdi

          “On a pile of money with many beautiful ladies.”

        • 0 avatar
          usernamealreadyregistered

          “If you can’t learn algebra, and a lot of people can’t, finance is probably out of reach too.”

          Bingo. Setting aside the truly foolish and the truly unfortunate, a significant number of people simply aren’t bright enough to understand the mathematical implications of terms that seem, on a monthly basis, to be manageable. Sending these people into a car dealership every few years is like sending me into an NFL game for a couple of plays. Limited chance of survival with a likelihood of lifelong injuries.

          • 0 avatar
            pb35

            eh, I’m no math wiz but I know enough not to finance more than 48 months at a rate which is appropriate for my credit score.

        • 0 avatar
          CarnotCycle

          Most people know algebra actually. I think innumeracy is a little more subtle than that.

          For instance, I have seen kids do all the usual “I hate math” or “I’m a visual learner” or some other cop-out when it comes to math. But then I see same kids sit down in front of World of Warcraft for ten hours straight, and bulk of their time spent there is math worthy of a small business tracking their game’s character and making cost-benefit analysis constantly with myriad mathematical abstractions.

          So I think innumeracy has to do more with syntactic illiteracy than conceptual illiteracy – same difference as knowing how to speak English, even approximately, versus knowing how to diagram a sentence.

      • 0 avatar
        fvfvsix

        @Alexdi.

        Yeah, BS. I was born both poor and dark to parents who worked their way across the poverty line in my lifetime. Being born at a disadvantage is one thing. Complete unwillingness to do things differently because those actions are too “white” is another. Your statement makes you sound like you’ve never been either poor or dark skinned. Let me know if I’m wrong.

    • 0 avatar
      JimZ

      yeah, it’s a sin to grow up in a poor family.

      “bootstraps” don’t do anything when you have no boots.

      • 0 avatar

        I knew a man, Emil Reed, who was close enough to my family that I called him and his wife, Etta, uncle and aunt. I didn’t know until after he passed away that Etta was his second wife. They met in a displaced persons camp in Europe. I knew that most of Etta’s many brothers and sisters were exterminated by the Nazis but it wasn’t until I was at a memorial service for Emil, who was 94 when he died, that Etta was his second wife. The Nazis murdered his first wife and infant child.

        If Emil Reed could start over (and by 1950 he and Etta, with her brother and his wife started a leather apparel company, Reed Sportwear, that still exists), so can someone born in what we call poverty today in the United States.

        Life isn’t about getting dealt a good hand, it’s about playing the hand you’re dealt well.

        • 0 avatar
          FormerFF

          Not everyone can be an exception. If there are X amount of low paying jobs, and there are fewer jobs than job seekers, X number of people will be working low paying jobs.

        • 0 avatar
          psarhjinian

          “Life isn’t about getting dealt a good hand, it’s about playing the hand you’re dealt well”

          Tell that to a kid who’s brain-damaged from birth due to lead poisoning, fetal-alcohol syndrome or what-have-you.

          “Do well with the hand you’re dealt” sounds a lot like “Eff you, I got mine, you get yours”.

        • 0 avatar
          DevilsRotary86

          My computer science teacher in High School had a loosely similar story. He wasn’t a Jew; he was Dutch Christian. He was born about 1939 or 1940 I believe, which would have made him a young child when the war ended. His family was an upper middle class to lower upper class family prewar, with a significant portion of their investments tied to companies based in the then Dutch East Indies. After the war and after 1949 his family’s fortunes were entirely wiped out. He described it as simply the most miserable time of his life. He was cold, and his family was homeless.

          His family won the lottery and were allowed into the United States as refugees. There, no one in his neighborhood spoke Dutch. No one in his school spoke Dutch. His parents refused to speak Dutch anymore at home. In his words “I learned English pretty fast”. He went on to serve in the US Army, served in the Green Berets, and was a distinguished veteran. He went on to found computer companies in the 80’s, none that found the success that Mr Reed did but wasn’t unsuccessful either. And eventually became a successful computer science teacher.

          So I agree with you. It’s not easy, and no it doesn’t always work. But it’s possible to rebuild from nothing even if not guaranteed.

          • 0 avatar
            Whatnext

            As inspirational as these stories may be, the opportunities in post-war America, on the verge of a historic wave of economic expansion, are quite different from those available now.

          • 0 avatar
            JimZ

            plus too many people work under the assumption that all opportunities are equally available to everyone all of the time.

            plus, the stories of individuals who started with nothing and built up into something successful- while true- tend to omit a lot of the help and “hands-up” that these people received along the way. That it might have come from family, a friend, or someone looking to take an investment gamble is still assistance even though it didn’t involve the government.

            While I’m sure there are people who truly went from rags to riches with absolutely no help from anyone or anything else, there must be very, very few of them.

          • 0 avatar
            fvfvsix

            @JimZ:

            As far as I’m concerned, the only thing someone born at a disadvantage needs to make it in this country is a healthy IQ and a complete and utter disgust for any individual that claims to “help” them. Worked for everyone I know. And none of us had boots, dude.

    • 0 avatar
      Rick Astley

      Lifetime credit card debt: $1,000.00
      Missed/late credit card payments: zero
      Missed/late car payments: zero
      Foreclosures: zero
      Bankruptcies: zero
      Live within my means: always
      Divorce: Screwed over royally in court, ex given house that she politely didn’t pay for for over 2 years, crapping out kids every time they were going to foreclose, doctored mortgage statements (which the bank would not send me directly), violated every aspect of the divorce decree.

      Current credit score: nuclear

      So perhaps it is not always a situation where a person simply makes poor financial decisions, there may be circumstances beyond a person’s control.

      But I DO want to live in the world that you do, where everything is perfectly black and white!

      • 0 avatar
        pragmatist

        But I would argue that step 1 if you’re in a tight spot is don’t buy a new car. Much better to get one that’s already depreciated.

        Same thing with other expenses. It’s kind of sad that people think that new car, furniture,appliances are necessary.

        • 0 avatar
          Alexdi

          It’s considerably easier to get financing for new vehicles. Late-model used vehicles in good condition can cost just as much in practice, but lack the security of a warranty. Poor people don’t have thousands of dollars sitting around to deal with potential mechanical problems. Unless they’re priced out the market entirely, it probably makes more sense to buy a low-end new vehicle.

          Appliances are cheap in the grand scheme. Buying used costs time these people don’t have for slight, if any, savings.

          • 0 avatar
            JimZ

            you often can’t get traditional financing at all on a cheap used car; I’ve been told in the past most lenders won’t write loans on anything over a certain age and/or mileage. Then your only option might be BHPH.

          • 0 avatar
            pragmatist

            I’m not necessarily suggesting a clunker. 4 years can save you thousands and you can still get financing. Hell the sales tax on a new car can cover quite a few repairs.

          • 0 avatar
            RHD

            A hundred-dollar stove from Craigslist will cook your food just as well as a thousand dollar stove from Home Depot, and will give much more than 10% of the service life of a new one.
            Personally, I would always prefer to buy new over used (except for cars), but that’s often a poor choice for those who are barely getting by.
            A few years a go I bought a used Bosch dishwasher for my home for a small fraction of the new price. It’s been trouble free, and cleans better than any GE that I have ever used. No point in buying a brand new one.
            Maintaining a used car yourself can avoid those scary “huge repair bills”, and overpriced maintenance costs. (Changing the AT fluid every couple of years or so will greatly increase its life.)
            That does require a bit of education and willingness to work, a lack of which may be the root of the problem at hand.

        • 0 avatar
          JimZ

          when you’re in that predicament, you often can’t risk having an unreliable car lest you lose your job for absenteeism. a warranty and the fact that many dealers offer loaners or shuttle services to at least get you to work.

      • 0 avatar
        dwford

        There are people who’s bad credit can happen to them, such as persons in divorces or kids whose parents take out credit int heir name.

      • 0 avatar
        everybodyhatesscott

        Marrying the wrong woman is a poor financial decision. Not that I don’t have sympathy, the divorce courts are stacked against guys.

      • 0 avatar
        VoGo

        Rick,
        Did your ex-wife ever tell you:

        Never gonna give you up, never gonna let you down
        Never gonna run around and desert you
        Never gonna make you cry, never gonna say goodbye
        Never gonna tell a lie and hurt you

    • 0 avatar
      spookiness

      I’m a fiscally tight and responsible person, FICO >800 for as long as I can remember, but jeez sometimes good people make bad decisions, and bad things happen to good people. Lighten up. No matter how well you prepare, a personal or family emergency can ruin somebody in a heartbeat. I loathe Nissan’s and Mitsubishi’s but I know people who bought them and were glad to get back to life again.

      • 0 avatar
        Hemi

        Also I don’t see any problem with Nissan or Mitsubishi. I find the Altima and Outlander Sport to be perfect vehicles for what they are. Not everyone can afford and deserve to drive “expensive” cars. Having driven both the above cars multiple times as rentals, they did everything fine for basic commuter cars. I’d personally but an Outlander sport over a CRV4.

    • 0 avatar
      Hemi

      I agree. Everyone makes mistakes, but some people continue to make financial mistakes. Buying cars, homes, TVs, phones and clothes they can’t afford.

      You don’t need to buy a new fucking car, buy a used car, learn how to maintain or get it maintained and use it. Everyone in the US is getting spoiled and feels entitled.

      Guess what I did when I couldn’t afford a car? I walked, took the bus and hitched rides from friends. I worked my ass off and saved so I could buy a car on my own in cash.

      I can’t deal with assholes that need to buy “insert phone here” on these 30 dollars a month plans for 30 months. These are the same people that have 3 TVs, MacBook and other BS in thier rentals. They struggle to pay thier bills and survive. Same people who are jealous that I take vacations, drive a nice car and own a motorcycle. Guess what I work and only buy things I can afford and I value. Not what my neighbor or people on Facebook will think.

    • 0 avatar
      ericb91

      As a 3-year car sales veteran, a lot of the bad credit I see is due to medical bills. People don’t have the best (or any) insurance, get sick or hurt and end up foreclosed, repossessed and bankrupt in no time. It’s a vicious cycle.

    • 0 avatar
      dwford

      No one has a low credit score because of their race, or even their income.

      What I meant by original sin was what was the first financial mistake that set the person on the path to a low credit score. Was it teen parenthood, not paying on that first credit card, stiffing the cellphone company, drunk driving, whatever. People are poor because of that first big mistake they made, and the compounding consequences of that and other financial mistakes. It is very hard to get out of the debt trap once you’re sucked in.

      • 0 avatar
        Paragon

        dwford, I fully understood where you were coming from in your statement in regards to origin sin.
        There’s times I wonder if some of the B&B take some pleasure in accusing someone of something they clearly didn’t mean to imply. Or, some may seize any opportunity to veer the conversation off in another direction. And, there are certainly a number on here, self included, who are not afraid to be a little silly and humorous at times.

        Now back to the topic at hand, there exists also the matter of poor impulse control. That of distinguishing between wants and needs. People sometimes say things which are far from the truth. Let me give an example from the past. Many, many years ago, a sibling said “everybody on the pier has a fishing pole but me.” The reality was maybe 20% of the people had fishing poles. A suspect that what he was doing was hinting that he’d like to have a fishing pole. He was justifying his need based on his false claim that everybody else had one. Also, when it comes to the purchase of vehicles, appliances, clothes, cell phones, etc, some people may be more susceptible to the hidden effects of advertising. Otherwise, why would companies spend enormous amounts of money on advertising?

    • 0 avatar
      tbp0701

      Quite some time ago I paid off all my debt–mainly student loans and hospital bills after needing surgery while working as a “contractor”–and decided to live debt free. I even used debit instead of credit cards. I thought things like my cell phone service would keep my credit reporting going, but it didn’t. So after a while I found I was sub-prime with no credit history and couldn’t even get a regular credit card. So I guess my original sin was not having debt, which was surprising to me given how much better off I was financially than in my struggling student/musician/buying-on-credit days (or in automotive terms, my “Nissan years”).

      Also, the way some lenders treated me was condescending and insulting.

      Fortunately no debt and working too much to spend a lot meant that I wasn’t in real need of a loan, so I swallowed my pride and got a secured credit card. After a year I was able to get a regular card, and another later. I use them and pay off the balance each month, so after a few years my credit rating is quite high. I probably should have also taken out a loan for the car I bought in 2012, but after recalling how I felt during my time as subprime, I decided against it.

      My point in writing this is that not every sub-prime person is in that position for stereotypical reasons. (I also got to experience being seriously injured while uninsured, which almost did cause financial ruin.)

      • 0 avatar
        MBella

        A secured credit card is never the answer. Get a Capital One card. They’ll give one to anyone with a pulse, and probably someone without one.

        • 0 avatar

          In today’s economy it seems to me that no credit rating is worse than a bad credit rating.

          I reestablished credit by joining a credit union and taking out a couple of signature loans secured with my own money, essentially borrowing my own money, so when I made a payment those funds were available for my use.

          It worked well enough that Citi eventually offered me an unsecured card. When that offer came in the mail, I asked my credit union about it and they said I qualified for one of their own Visa cards.

          • 0 avatar
            Adam Tonge

            No credit is much better than bad credit. I can approve credit card/unsecured line of credit applications sent to me by my branches for up to $2500 as long as the borrower has income and it’s within proper debt-to-income levels.

          • 0 avatar
            Paragon

            I agree with Ronnie. Stay away from all the big-name banks. And all the other ones, too. Credit unions are the best way to go. Have been a member for 25 years. My home mortgage is through a local S&L. And S&Ls are also superior to banks in most regards, too.

        • 0 avatar
          tbp0701

          This was a number of years ago, and the method I took worked out quite well. I didn’t like going that route, but once I did the rating rose quickly. After a year the secured card bank refunded the amount I deposited with them and moved me to a regular card, without my asking. They’ve since sent me a fancy looking, sparkly black card with exclusive sounding words emblazoned upon it.

          As an aside, after dealing with some of Capital One’s communications/PR people for a few years I’d never personally do business with them.

    • 0 avatar
      JohnTaurus_3.0_AX4N

      Yep, its their own fault that they got an apartment with roommates who screwed them over. Its their fault that they couldn’t pay their bills after the economy took a downturn and they lost their job, or they got hurt and were unable to work.

      If you think its easy to deal with the latter by getting disability benefits, worker’s comp, or other assistance, I invite you to try.

      The above situations happened to me. I was 19 or so, I had a decent job. Two friends convinced me to get an apartment in my name and we would share rent and utilities. While I was at work, they called and got cable tv under my name. I left them money to go pay the power bill, but they spent it instead. Long story short, by the time I realized what was going on, it was too late.

      My fault in that situation was trusting people I thought were my friends.

      Then September 11th happened. Since the airline industry was in crisis, the local major employer being Boeing, massive layoffs occur as the ripple effects made there way into everyone’s lives. Naturally, not many people were out buying Navigators and Mountaineers. Ford had discontinued the Tracer and Mystique, so we had no cheap cars to sell.

      The dealership didn’t fire anyone, but all of us going months with only 1-2 sales each, it wasn’t easy.

      Then I was hit by a Z71 while driving my friends 1991 Accord. I sustained major injuries to my back (spine, vertebrate, etc) that I’m still dealing with today. I could no longer work. My Integra GS-R was promptly sold. The rest of my cars were worth very little (87 Tempo, 92 Tempo LX, 90 Tempo, 83 Zephyr, 86 Taurus LX), so I sold all but the 92 Tempo and the Zephyr, but that only paid rent for a couple months.

      Since that time, I’ve tried to work but have been unable to keep a job very long. Its hard to justify keeping an employee when he calls in 2-3 times a week, but I had no choice but to call in. If I couldn’t get out of bed and get dressed, how was I going to work?

      I’ve tried for years to get on disability to no avail, despite the mountains of medical evidence that makes it painfully clear that I’m not making it up.

      So, don’t feel sorry for me, I don’t want your pity. All I really want is for you to understand that some people in this situation didn’t get here because they abused their credit, or because of drugs, gambling, or whatever other vice you imagine they have in order to “deserve” their limited funds and poor credit. I’ve never had a credit card, I never abused my credit intentionally. I’m not a drug user, and I’ve been in a casino maybe 5-6 times my whole life and have probably spent less than $100 combined. I’m not a heavy drinker, either.

      It must be nice to sit back and judge people without knowing jack$#¡Г about how they got in their situation. Sure, there are some who intentionally tried to live above their means and got in a bad way as a result, but that doesn’t mean everyone who isn’t rich and has poor credit deserves what they get.

      *edit: the Z71 driver had very basic insurance. Years went by before I received a couple thousand dollars, which quickly went away trying to repair my broken life.

      • 0 avatar
        Frank Galvin

        John – very sorry this happened to you, I truly am. Some time ago you left me a very nice compliment on here regarding my wife. I’m an attorney by trade and have done some SSDI cases. If you’d like, I can use some contacts on my SSDI attorney listserve to see if I can get you a referral to a reputable and competent one in your area. SSDI cases are pure contingency with fees capped by SSA. If the powers that be are willing to open up access, I’ll be more than happy to take an email from you, or send you mine.

      • 0 avatar
        Hemi

        John I’m sorry about your situation. There are many people who have similar situatiins. There’s 2 types of people with bad credit, the ones who had a series of unfortunate events out of thier control and then the frivolous spenders that continue to spend well out of thier means.

        I absolutely detest the credit rating agencies and debt collectors. They are able to add anything derogatory to your record and now you spend a lifetime fighting to remove incorrectly reported debts and collections.

        Don’t even get me started on auto insurance….

      • 0 avatar
        28-Cars-Later

        @JohnTaurus

        This really sucks to hear. All I can say in response is I am a person who believes the body can heal itself to a great degree, but the method of action is simply not well known (Eastern Medicine comes to mind). I encourage you to do your own research into the matter, but I will throw out the A.R.E. for it’s work in reflexology/massage therapy:

        http://www.edgarcayce.org/content/about-us/virginia-beach-hq/are-health-center-spa/

    • 0 avatar
      CaseyLE82

      I wish people would stop saying this. We DO teach financial literacy starting in Kindergarten where they learn things like identify ways to earn income, differentiate between money earned and money given to you by someone else.

      Every grade has a full set of learning objectives over personal financial literacy that get pretty advanced. By grade six they are explaining why it is important to establish a positive credit history, describing the information contained within a credit report, describing the value of credit reports to lender’s when making decisions to loan money.

      By high school they are learning macro and micro economics, money matters, and mathematical models of money.

      There is no world in which they aren’t being taught, it started in 2010, but those kids won’t graduate for a while.

      • 0 avatar
        Scoutdude

        They certainly didn’t teach anything like that when my kids were in school and they just recently graduated and from a highly ranked district.

        Thankfully there mother and I are more than capable of teaching them the financial knowledge that they need to succeed. Of course implementing it is up to them. So far I have high hopes for my son as he had a credit card by age 20 based on his good pay and high savings acct balance at our credit union. Soon after Discover gave him a card and now at 22 w/o a job for ~1yr because he is going to school full time now he is starting to receive offers from American Express.

        My 19yo daughter on the other hand is resisting getting a credit card in her own name. It was rewarding to hear my son tell her that she needs to do it to establish a credit history and the longer the history is the better off she will be in the long run, assuming of course she makes her payments on time.

  • avatar
    seth1065

    Well unless it is medical bills that forced them into sub prime state , I really do not feel to bad for them, and I am sure med bills sent a fair amount of folks to sub prime land. If your in sub prime land you should really not be buying a new car, your stretch to the hill in 95% of the cases so no new car, it is pretty simple , buy used, let someone else who maybe can afford it take the depreciation hit, there are plenty of used cars that will get you where you need to go. The system is setup against sub prime folks but you do not have to help the system but buying a new car.

    • 0 avatar
      JimZ

      yeah, because nobody ever gets laid off from their job and has difficulty finding another one.

      No, that never happens. Especially when it “wasn’t happening” from 2005-2010.

      in “Internet Land,” if you lose your job just go down the street to the Job Store and pick out a new one.

    • 0 avatar
      Adam Tonge

      My wife and I both lost our jobs this year. Neither termination was performance related. If we didn’t have some savings and weren’t able to find jobs relatively quickly, we would possibly be subprime customers. Bad things happen to good people.

    • 0 avatar
      thegamper

      I know pretty well what it is like to be subprime. Growing up my dad had some “problems” to put it lightly, getting anything was always a chore, coming up with a few hundred dollars was never easy for anything. It all had to be cash..now. Thankfully I have pulled myself up out of that, I knew all along how to do it: always pay, always on time. I think the reality is, that you need resources to begin with in order to accomplish this. I was lucky enough to be able to put myself through college and law school. (Still paying for that by the way), but now I have resources that I never had as a kid, that my parents never had. I have somewhat a unique perspective on being poor going from poverty as a child where repossessions, shutoffs, even hunger was a problem to household income ranking in top 10% nationally. A great deal of it does have to do with the family you are born into. A family with resources will always pay bills, their kids will always have opportunities. A family without resources, will always find a way not to pay. It is a vicious cycle that is not easy to escape. Everything costs more for you thus you cant afford everything or anything for that matter. The house of cards eventually falls and you start over. There are values involved, values that are taught by your parents, friends and family. But those values also include the art of getting by, of surviving. There is much more at work here than just people who make poor choices, cant understand contracts, or properly budget. A good deal of subprime individuals simply know no other way, do not have the resources to pull out of the cycle….and so it continues.

  • avatar
    Dingleberrypiez_Returns

    Nice article. I particularly like the non-judgment, which is not exactly usual for TTAC…I’m sure the comments will alleviate that.

  • avatar
    Kenmore

    Swell.. now I can’t get Elvis’ voice out of my head.

  • avatar
    dal20402

    Mark, this is a great article from start to finish. The last paragraph is the best: “you still have the right to negotiate.” So true.

    Not everybody with subprime credit is there because of mistakes. But even if you made mistakes and are paying for them with subprime status, you are still human, and you still have the basic human rights to ask questions, state your opinions, talk to additional people, and/or walk away. Don’t let the dealer prey on feelings of guilt and embarrassment. You won’t get the same terms as someone with prime credit, but you have the power to get the best possible deal given your credit score.

  • avatar
    JimC2

    It’s expensive to be poor.

    • 0 avatar
      kvndoom

      It really, really is. I still remember in the 1990’s when I got my first ever car loan, wondering… “why do I have to pay MORE interest than someone who makes 3 times my wage?”

      I’m glad to be out of that hole, but I will never, ever forget where I came from.

      • 0 avatar
        SCE to AUX

        Of course, the answer to your question is:

        The bank is making you pay for them to accept you as a more risky client. The higher interest pays the bank for the fraction of people who default on their loans.

        It *is* good to remember our humbler beginnings.

        • 0 avatar
          kvndoom

          Yeah I understand that quite well now, but 23 years ago and making less than 5 bucks an hour (I only got a “raise” when minimum wage went up :-/ ), it was a harsh world out there.

    • 0 avatar
      iama

      It’s expensive not being poor. The percentage of my income that goes to taxes is very high. If you’re poor, you might get money back. I pay full bore for medical insurance. The poor get much of it paid for them. Same goes for so many things.

      Yes, it’s expensive being poor. It’s also expensive to be the folk paying for the poor.

      • 0 avatar

        The poor pay a higher percentage of their income on things like interest rates and sales and use tax then you will and possibly property tax. Plenty of wealthy people get their insurance paid for in full by employers (lots in my experience actually). Obama care covers alot but still has deductibles and copays for all but the most poor (it may actually make them poorer that way). Also when you are making minimum wage in West Virginia and have to pay 5% sales tax on groceries and realize you miscalculated that check you wrote and it bounces you realize the fees associated with the same just cost you another 10-15% of your weekly income. Yeah being poor is awesome.

        • 0 avatar
          iama

          I never said being poor was awesome. In fact, I agreed that it’s expensive to be poor.

          Never said I was wealthy. I’m middle class. I get to pay for everything, for myself and for others.

      • 0 avatar
        SaulTigh

        I fully agree. My wife and I have to pay quite a bit in taxes because we don’t have anything available but standard deductions. We also have assets to protect so we outlay a lot for high coverage insurance. We’ve got great jobs, but also have the now-standard high deductible health insurance so my recent ER visit cost me a cool $2,000. At least the premiums are relatively low. I did find out however, that if you’re willing to pay in full they will automatically knock off 10%. All this for paying my bill in person.

  • avatar
    ajla

    Is there any legitimate reason why buyers need to meet the F&I person face-to-face?

    • 0 avatar
      Truckducken

      1) Time spent there is time not spent at another dealer
      2) Upsell, upsell, upsell

      In other words, no.

    • 0 avatar
      eggsalad

      I guess it depends on the state and/or the dealership. When I bought my car at a Chevy dealership in Phoenix, I had a check in hand, but I had to see the F&I guy, because he was also the guy trained to do the DMV paperwork.

      He offered me an extended warranty, I declined. After that, I spent 10 minutes BSing with him while he filled out forms, printed paperwork, and I signed it.

      He wanted me out of there fast so he could get the next buyer in, who was hopefully a sucker.

      It wasn’t a big deal.

  • avatar
    Scoutdude

    No more than half of the country are not subprime. The article you posted to prove your point is ancient, and they chose a number (700) higher than the median as their cutoff point to be subprime. Even people below the median are no considered subprime. Most mortgage lenders consider below 600-660 to be the subprime cutoff. While over ~720 is where most lenders consider to be the cutoff between good and excellent.

    So how about an article that gets the facts straight http://www.wsj.com/articles/consumers-improving-credit-scores-give-banks-reason-to-cheer-1466587801 Hey look the facts are that under 25% of the people with a credit score are subprime, a reasonable level.

    Now in the case of auto loans you will find lots of dealers that will stretch the truth as to what is considered subprime to lead consumers to those high interest rates.

    • 0 avatar

      Just looked up a few articles subprime numbers seem to vary from under 700 to under 600 the most common seems to be 640, which would put about 38 percent of borrowers as subprime.

      • 0 avatar
        Scoutdude

        640 is the cut off for most mortgage lenders. That puts only 20% of buyers as subprime as noted in the article I posted the link to and that is down from the peak of 25%.

        • 0 avatar

          This WSJ artcle lists it as 4 out of 10 subprime. http://www.wsj.com/articles/lenders-step-up-financing-to-subprime-borrowers-1424296649
          This fox business says 58% have a score over 660.
          http://www.wsj.com/articles/lenders-step-up-financing-to-subprime-borrowers-1424296649
          It’s funny this article seems to ignore people with 600-660 scores which would push the number of subprime borrowers they have over 40%. It does states 30% have a score lower then 600.

          • 0 avatar
            Scoutdude

            Sorry but that article is almost as old as the one Bark pulled out. Find something that is at least from 2016.

          • 0 avatar

            Sorry wrong link this one is from 2016
            http://www.foxbusiness.com/features/2016/02/15/how-many-americans-have-bad-credit.html
            is the one I meant for the 2nd link.

  • avatar
    JMII

    Just because you can afford a $300 a month payment doesn’t mean you should. When my wife and I went to finance our current house the bank (aka the idiots that caused the economy to tank previously) told us we could get a loan for TWICE the amount we requested. We said no thanks and bought a more reasonable priced home. Most people don’t do this when it comes to cars – if they can get approved for $500 a month that is what they spend… until they can’t. As mentioned above this is due to a lack of education on how credit works, for example how interest rates are calculated and how they compound over time is not part of high school math class. So many people over spend and (of course) dealerships are going to take advantage of these people as much as possible.

    I’m lucky to have beyond excellent credit, yet my newest car is 8 years old and our other two vehicles are 13 and 14 years old. Plus I own a boat which is like throwing money away. However we haven’t had a payment in over 5 years and have a 15 year mortgage. Granted I am a cheapskate and my wife is even worst, we save money as if its a rainy day and we live in a rain forest. It helps that my wife is in accounting and thus spends hours looking at spreadsheets, so being frugal is in her DNA.

    • 0 avatar
      PrincipalDan

      (Reminding me of why my first wife is no longer my wife.)

      Went to get a home loan for the first time in 2005. The criminals at Wells Fargo pre-qualified us for an amount that I knew full well was at least $30,000 more than we could actually afford to pay (and I was smart enough to sit down and do the math about monthly payments at various purchase prices).

      Woman looked at me like I had three heads when I suggested a buy a home for “less than the bank said we could afford.”

      • 0 avatar
        Paragon

        PrincipalDan, glad to hear you were smart enough to recognize what was best for you while ignoring “the criminals at Wells Fargo.” Back when I bought my house, 2001, as well as now, there were and still are many financial institutions that I instinctively know I could never trust. I’ll point out that my father was an accountant and may have had an influence on me learning to live within my means. I do my own taxes and have never had to pay to have them done. I do a lot of reading up on tax law changes before getting started each year. Unless a person has a lot of investments and rental properties, I don’t understand why more people don’t do their own taxes. It’s really not that hard. No need to pay for something that you can do yourself.

      • 0 avatar
        duffman13

        This is why I always do the math and work my maximum intended payment backwards to an ideal financed amount would be. Taking the advice of someone who makes more money the more you borrow is generally the worst way to go about figuring out what you can afford.

    • 0 avatar
      Alexdi

      > Most people don’t do this when it comes to cars – if they can get approved for $500 a month that is what they spend… until they can’t

      I’m keen to know if this is actually true. There’s a narrative that people are poor because they buy luxuries beyond their means. I suspect it’s more the case that they’re buying the minimum, but don’t have the means even for that.

      The best advice I can give to anyone with a nest egg is to buy insurance. Medical problems and at-fault liability can wipe out twenty years of scrimping at the drop of a hat. You can do everything “right” and still lose.

      • 0 avatar
        Hemi

        What’s insane is when you speak to someone who went to the dealer for the “cheap” payments offered, only to those with fine credit in small print, come back telling me how they are paying close to 500 a month for over 72 months on a 24k car…

    • 0 avatar
      mic

      I too bought a house about 2/3rds what I could get approved for because I don’t want to be house rich and cash poor. Houses lose their luster when you can’t afford to walk out the front door…

    • 0 avatar
      Paragon

      JMII, I liked hearing what you said, and I think it bears repeating. Just because you (think you) can afford a $300 a month payment doesn’t mean you should. There are many things that fall under the category of “just because you can, doesn’t mean you should.” So very glad you didn’t fall for the tactics of the scumbag, criminal bankers.

    • 0 avatar
      iama

      JMII, that’s a key reason why we have some of the problems we do. People will buy whatever they’re allowed to buy. They need to get over it.

      Can’t afford a jetski, don’t buy one! Can’t afford 20% down for your house, rent! Can’t afford a $40,000 car, buy a $5000 car!

      Do these things and you’ll be in a better place. It’s too bad that many people don’t get it.

  • avatar
    Jimmy7

    Well done, Bark.

  • avatar
    DC Bruce

    If Toyota and Honda dealers are missing out on making this money that you say Nissan and Mitsu dealers are making, I’m wondering why that is. Are they stupid? People in business don’t usually pass up opportunities that come their way. The article doesn’t answer that question.

    Regarding the subprime thing, I’m not going to be judgmental. Lots of folks, I think, mis-perceive the degree of financial risk they’re exposed to. In other words, looking at their monthly “nut” (the bills that must be paid every month, e.g. utilities, car payments, credit card payment), how long they can go if their current source of income is cut off. That said, there are a lot of people who simply can’t do anything to reduce that exposure (i.e. save up for a 6-month rainy day fund).

    One of the unfortunate consequences of the reaction to the subprime debacle is, in my opinion, the over-regulation of credit availability, which hurts a lot of people. Credit is cheap right now, but unobtainable by a lot of people.

    Finally, although I’ve been fortunate to have only been married once (42 years and counting), I read a lot of stories like Rick Ashley’s. Given that, it would seem to be that the money spent on a pre-nuptial agreement might be money well spent. Very “un-romantic,” I know.

    • 0 avatar
      dal20402

      I expect Toyota and Honda don’t want the reputation that comes with the subprime customer base, so their captive finance arms aren’t as willing to play ball with subprime customers. They can sell most of what they produce to higher-credit buyers.

    • 0 avatar
      psarhjinian

      “If Toyota and Honda dealers are missing out on making this money that you say Nissan and Mitsu dealers are making, I’m wondering why that is. Are they stupid”

      They don’t need to do it. They make enough money, and have a solid enough customer base, that lowering requirements would lose money for their respective captive-finance divisions.

      Meanwhile, Mitsubishi doesn’t have such a solid revenue stream, so they have to take some risk.

  • avatar
    Rochester

    What an incredibly arrogant wide-brush the author is using to open with here. Un-freaking-believable that someone who can read and write and be interested in cars would say something so demonstrably stupid.

    GTR, Maxima, 370Z owners, as well as anyone with an EVO, or an Infiniti for that matter… none of those car owners would give you more than a moment to say something ignorant, and then rightly laugh in your face.

    • 0 avatar
      Alexdi

      Did you even make it to the second sentence?

    • 0 avatar
      Dingleberrypiez_Returns

      I know right? Let me go spin some donuts in my viper to blow off some steam. /s

    • 0 avatar

      The twelve people who bought an EVO did it with Navy Federal or USAA loans, are on allotment, and nine of them will have their car repo’d after they do their hitch.

      As far as Maxima owners, I don’t think Dollar/Thrifty has a TTAC account.

      • 0 avatar

        As crazy as this sounds I have a friend who was a sales man at a mitsu dealer when the EVO came out. He said every punk kid wanted one but the people who actually did buy were typically well off and paid cash. Here in CT they were mostly kids attending colleges from other countries who’s parents had serious cash.

        • 0 avatar
          Pete Zaitcev

          The only guy who I knew had an EVO bought it with his pre-marriage salary (not sure about financing details – and it was a few years ago). He drives some kind of minivan now and works for Microsoft. Back when I wanted a car of that nature, I bought a Neon, because it was all I could afford. EVO was far, far above.

      • 0 avatar
        brenschluss

        That sounds like a geographic phenomenon, around here everyone who bought an Evo is an old man with another three cars who immediately spent $25k on it, so I don’t think they’re getting repossessed.

        Outlanders, however, always appear to be in a state of perpetual near-seizure.

  • avatar
    Chan

    If you’re subprime, absolutely NEED a reliable new car and your “budget” is $300/mo, you should be looking at cars that are $100-200/month and using the rest to either save or pay off debt.

    My sympathy is for those who absolutely need a new car today–that can happen if your car breaks down and will cost $4000 to fix, and you could get fired if you’re late for work for anything other than a severe illness. These people are the golden car dealer prey.

    • 0 avatar
      RHD

      If you can’t afford $4000 to fix your car, park it and buy a $1500 car. Now you have two cars, can still get around, and can take a little time to save up to fix the one that broke down.
      And maybe you have a neighbor who works on cars, can get a good used engine/transmission/BMW fuel pump from a wrecking yard and do the job at a third of the price.

  • avatar
    SCE to AUX

    Headline: “Subprime Customers Don’t Get To Negotiate”

    Summary: “You still have the right to negotiate your purchase price.”

    Pardon my cognitive dissonance on this apparent contradiction. I suppose you’re referring to how the interest rate may not be negotiable, but the price always is.

    *************************

    Also: “the vast majority of the customers who end up in a car from one of these brands are in them for one reason, and one reason alone: they’ve got subprime credit”

    I resent this stereotype; is it based upon fact, or is it just an internet meme?

    • 0 avatar
      Pete Zaitcev

      Bark’s got carried away. They can’t get a cellphone? Puleeeeeeze.

      Some other details are curious too, because I’m fairly ignorant about them. For example, the gap insurance. I don’t know if the forced gap insurance is a thing. My CU pointedly suggested to me that I take one out, and I did, for my 1st car. I bought that car with zero down and paid some kind of 80-20 scheme for a while, because I arrived into the country with $200 in my pocket, but I needed a car to commute. So may as well be forced, nowadays. However, I don’t know either if I may trust Bark when he makes these off-hand claims, because, well, see above.

  • avatar
    VW16v

    Showing a Nissan Altima as the picture of subprime lending is oh so accurate. Nissan dealers in the south east thrive on lower income buyers and subprime loans.

  • avatar
    dividebytube

    When I bought my Clubman used – at a Dodge/Jeep dealership of all places – I got a small car loan.

    When my finance paperwork came back from the credit union, the salesman was surprised to see the low interest rate I got.

    Him: You must have a great credit score. I haven’t seen an interest rate that low in a long time.

    Me: I never missed a payment in my life.

    Which is true. And I don’t buy cars that cost me $500 a month.

    But it made me wonder – what kind of people buy cars from this dealership? They certainly were anxious to unload the stick shift Mini on me, saying they really didn’t like taking it on trade-in.

    • 0 avatar
      ajla

      “what kind of people buy cars from this dealership?”

      When I bought my Charger I eavesdropped on a few conversations and it was a pit of sadness.

      From salespeople lying to an elderly couple about the towing capacity on a Grand Cherokee to a family with two infants agreeing to a 12% 84-month loan on a Journey SXT.

    • 0 avatar
      threeer

      And if you had bought a Durango from the Dodge dealership, would you have gotten a *big car* loan? Sorry…couldn’t help myself!

      As long as money is relatively easy to get to, there will likely continue to be a significant issue with folks overextending and running with less-than-spectacular credit. Granted, not every case of financial hardship is induced by frivolous spending. There are legitimate cases where, as has been said, “bad things happen to good people.” But even with that, it amazes me at how easy it is to get loans, many times for much, much more than what a person can truly afford. Examples already given here relate to home loans. If I had accepted the maximum amount the bank was willing to loan me for a house, I’d likely have a decent-sized McMansion. Instead, I took about half of what was offered and bought a small, older house several miles outside of town, and am all the happier for it.

      And for the record, with the exception of Kia, I’ve owned (at least) one example of each of the other “subprime” manufacturer’s vehicles!

  • avatar
    kvndoom

    I look outside my front door.

    Nissan.
    Kia.
    Kia.
    Dodge.

    My god, I am SO fucked.

  • avatar
    ericb91

    I’ve been selling cars since June 2013. Started with Toyota, then with Honda, and now with Ford. I can say- at Toyota and Honda, I saw next to no subprime customers. I honestly didn’t know much about them until I started at this Ford dealer in a rural market. Out here, terrible credit is EVERYWHERE. The 12-store auto group I work for (which represents all major domestics) has a whole Subprime department dedicated to this type of stuff.

    It’s not going anywhere any time soon.

  • avatar
    Pch101

    Solid article, well done. And I say that as someone whose FICO is on the north side of 800.

    • 0 avatar
      Scoutdude

      Are you feeling alright? Did someone hack your account? Because I’m thoroughly surprised that you thing this is a solid well done article. It’s basis is in an outdated article, that is nowhere near based in reality. Think about it it is impossible for 55% of the people to be below median. By definition 50% will be below median and being below median does not mean that you are subprime even if many dealers would love for you to believe that a 700 credit score will only qualify you for an 18% car loan.

    • 0 avatar
      iama

      PCH, watch that fico score. Mine was 830 one day and 710 the next. Nothing on my credit report to indicate why it dropped and no one is willing to explain what happened. fico is another scam.

  • avatar

    “Payment terms keep getting longer and longer as captive finance arms are now willing to go up to 84 months on relatively inexpensive cars. The longer the term, the more money is being paid in interest, even if the interest rates are low. The magic number for most buyers when it comes to payments is $300. So, as prices on cars go up, loans are just being extended to get buyers underneath that mark.”

    The max car loan available in this country should be 5 years. For a depreciating liability, five years, tops. Just like the 15 year mortgage eroded into 30, and now 40 and even 50, and guaranteed government-backed student loans removed market forces from college costs, cars are going the same way. For those of us who don’t want to owe banks forever, we’re still forced into a marketplace that will, in the long term, make it harder to buy on terms that we want, where our long-term financial well being is safeguarded. To go back to houses, it’s a bit like how your average middle class family isn’t really going to have much choice in many areas but to go for a 30-year mortgage, unless they want to live in a warzone or a shack, because everyone else is bringing that same credit to the table, which inflates prices and interest for everyone.

    It’s the economy of “affordability”, where St. Affordability ensures everyone can “own” everything, only the wafer and wine at the table is subservience, forever, to the financial sector and its well-heeled lobbyists.

    • 0 avatar
      SCE to AUX

      With so much of the economy based upon home and car purchases, lenders, builders, and car mfrs will do ANYTHING to make the sale. This means they will NEVER limit themselves to 5-year car loans or 15-year mortgages, lest the economy grinds to a crawl.

      Except for loss prevention, it isn’t in the bank’s interest to limit the length of a loan term.

    • 0 avatar

      Oh, I know why the various sellers and lenders are doing it. But the opposite is where we came from. You go back to our parents and grandparents, and you were generally considered an outlier if you went with a 30-year mortgage. I wouldn’t call the 50’s and 60’s bad economic times. What’s happened is the economy is now staggered toward easy credit. It’s an addiction. Going back wouldn’t be easy, which you’re right about.

  • avatar
    Sigivald

    “They can’t get bank accounts. They can’t get approved for a cell phone.”

    You’re saying *half the country* can’t get a bank account?

    Not all “subprime” people are equal, methinks.

    (FDIC stats from 2013 say only 7.7% of households don’t have a bank account. I don’t think it’s gone up to 50% in the past three years.

    Let’s not be quite so fast and loose with our categories and mashing them together, eh?)

    • 0 avatar
      iama

      Bark makes stuff up. Kinda like a presidential candidate.

    • 0 avatar

      No, I didn’t say that. At all.

      I worked for Cricket Wireless for four years. I think it’s safe to say I understand the subprime customer very, very well.

      • 0 avatar
        kvndoom

        ARRRGH.. you’re killin me Bark!

        2 Kia’s.
        1 Nissan.
        1 Dodge.

        AND I’m a Cricket customer! I CANNOT ESCAPE THE STEREOTYPE

        (I’m seriously laughing my ass off right now)

      • 0 avatar
        Scoutdude

        “I worked for Cricket Wireless for four years.”

        Which is likely why you think that so many people are sub-prime.

        Less than Prime does not equal Subprime, even though it certainly sounds that way on the face. Between Prime and Subprime there is a non-prime or average classification when it comes to credit ratings. People with non-prime credit rates can get loans from regular banks w/o much problem depending on their debt ratio.

        This is how Experian classifies the types of credit scores:

        Super prime:
        FICO Score: 740 plus
        VantageScore: 801-990

        Prime:
        FICO Score: 680-739
        VantageScore: 701-800

        Non-prime:
        FICO Score: 620-679
        VantageScore: 641-700

        Subprime:
        FICO Score: 550-619
        VantageScore: 601-640

        Deep subprime:
        FICO Score: less than 550
        VantageScore: 501-600

        Which is quoted from this company that specializes in Subprime and Deep Subprime auto loans. https://www.autocreditexpress.com/resources/videos/using_your_credit_report_to_determine_if_you_need_to_apply_for_a_bad_crdit_auto_loan/

        Which goes on to say “If you fall into either the subprime or deep subprime category, you’ll probably need to apply for a bad credit auto loan. At Auto Credit Express we help people with bad credit find a dealer that can give them their best chance at an approval for a new or used car loan.”

        Here is the real story on the state of US consumer credit ratings directly from FICO and an up to date date of 9/13/2016 http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/

        Look it shows that the average credit score is on the rise, since the low in 2009 and is a good bit above pre-recession numbers. The percentage of people with scores below 600 are falling. The percentage of the population with credit scores in the 600-649 is pretty flat while the percentage of population with a credit score of 650 and above is on the rise.

        But of course that doesn’t make good click bait.

        • 0 avatar

          All of the non prime customers will get hit with high interest rates and dealers game which seems to be the point of the article.

          This site shows FICO as 32% under a 650 score and transunion 38% under a 650 score. Current article out 3 days ago.
          https://www.nerdwallet.com/blog/finance/credit-score-ranges-and-how-to-improve/

  • avatar
    Jason

    Huh, and here I thought my Forte5 was exactly the car I wanted, had negotiated on price and not payments (and is now paid for), had declined all additional warranty nonsense, owned a house and didn’t rent, had outstanding credit, and was gainfully employed for the last couple decades.

    Ditto my wife and her Rio (except her 2013 isn’t quite paid for, yet).

  • avatar
    28-Cars-Later

    Stop poor in its tracks with equity and resale, neither of which you will likely find with the marques cited.

  • avatar
    SCE to AUX

    Since we’re talking about the difference of $50 to $200 per month, I’d recommend people should evaluate the other ‘essential’ expenses in their lives.

    Do you really need a $50-200/month cell phone plan with unlimited data, covering you and your spoiled children – who absolutely MUST have a cell phone at 10 years of age?
    [I pay $30/month, and make my kids pay for their own plan when they finally get a phone at the age of 16 – call me Amish.]

    Do you really need the HD Triple Play $140/month cable plan?
    [I pay $15/month for Dish, with lots of local and free channels. Netflix is another $9/month.]

    How about giving up the $150/month smoking habit, or the $200/month spent on drinks at the bar?

    Do you really need the brand new leather living room suite and 70″ TV, and another in every room?
    [About 90% of my furniture is used/inherited, and we have a single 30″ TV.]

    I’m not suggesting people should starve themselves of all of life’s joys, but a few sacrifices can prevent perennially bad credit from doing that for you.

    • 0 avatar
      Lorenzo

      You’re recommending that people live within their means. That’s un-American!

      • 0 avatar
        SCE to AUX

        More specifically, I’m saying that beyond a car purchase, the balance of life’s expenses is NOT fixed.

        But many people don’t consider that these things are really optional. Also, the money spent on infotainment is a new invention of the last 20 years. Even for me, I spent $0 on cell or pay TV in the 1990s. That stuff really adds up.

        • 0 avatar
          everybodyhatesscott

          I was spending $150 a month on cable, and that’s not even that bad. Eventually it ticked me off enough where I just canceled it. Probably one of the better decisions I’ve made.

          • 0 avatar
            brettc

            Cancelled cable in July of 2013. We just get the locals now, along with Netflix and SlingTV and journeys on the high seas for other content. SlingTV might soon be dumped as it’s just a bunch of commercials. Saved myself about $100/month by dumping cable.

    • 0 avatar
      Chan

      People at work keep talking about going “unplugged” for TV, in reference to switching to online streaming. I was never plugged to begin with, in the 7 years that I have been living on my own income.

      You mention cell phones–the same thing is happening to phones as what happened to cars.

      As smartphones rapidly approach US$1000, mobile carriers are cleverly offering what basically are lease plans. A monthly, and at the end you trade in for a new phone and continue the cycle of non-ownership. And it’s not really their fault that Americans are willing to go into debt for their cars and phones.

      • 0 avatar
        SCE to AUX

        I had to read your comment a couple times to get its meaning. Yes, the mfrs are just doing what they do, because there are always customers who are willing to chase the carrot.

      • 0 avatar
        duffman13

        TBH, as processing gets better and data gets faster, a lease plan makes more sense. I held on to my first iPhone (a 3Gs), and once the 5 had come out it was basically unusable due to the processing requirements on most apps. Now it can’t even load pandora or the reddit app in under a minute. A lease plan that subvents the former subsidized purchase that was baked into the cellphone plan makes more sense in my mind.

        Yeah, I know Moore’s law and whatever, but at this point it kind of makes sense – it’s not about having the latest and greatest. It’s about having something that’s still functional with modern hardware requirements. OTOH, my old flip phone that I had unlocked for international travel still works just fine.

        At a certain point it’s about deciding what is a want and what is a need. I’d go cellphone with unlimited data and tether at home over paying for cable/internet if I was in a position that it was a choice I needed to make. Internet in some form is basically a requirement to be functional in society nowadays though.

      • 0 avatar
        SaulTigh

        I’ve been truly “unplugged” for 4 years now after mounting a 20-ft pole and antenna on my privacy fence and running the coax into the splitter in the cable box on the side of my house. I get 12 channels with no pixelation and have a programmable DVR for recording off the air.

        Carry a 7 year old flip phone. My wife recently upgraded to a Galaxy Grand Prime for $100, and our Walmart Family Mobile plans cost a whopping $50 a month combined. Rent Blu Rays out of the Redbox for $2 a pop.

        I drop another $62 a month on high speed internet, and that’s it. We’ve got more entertainment than we can possibly consume.

        This frugality has allowed us to drive nice cars, eat good food, and save large amounts for our future or the inevitable rainy day. We live in a glorious era where living well is actually pretty easy, if you’re smart about it and are willing to actually work for a living. Many people are neither.

    • 0 avatar
      Paragon

      Right on, SCE! Preach it, brother, preach it!!!

      A $30/mo smart phone plan. Just got the smart phone this year. Kept my first cheap cell phone for about 10 years. No cable nor TV. No vices. Used furniture. And, going out to eat consists of only sporadically spending $2 or 3 dollars at Taco Bell.

      Living modestly helps me pay off the house faster, and putting me into a position to be able to afford a “brand-new car” (which I will keep for many years) in the not-too-distant future.

      • 0 avatar
        kvndoom

        I’ve been preaching Cricket Wireless to everyone who’ll listen for the past year since I became a customer. If you live in an area that’s served by AT&T (which is almost the entire country), you can’t go wrong with Cricket. For 3 lines with 2.5GB each it’s around $90/month.

        And all our phones are paid-off now, which makes that part of life a lot easier too.

        I’m not where I want to be yet (no active credit balances except for a mortgage), but I’m hoping in 5 years that will be the case. I’ve trimmed my student loans from $17000 to under $12000 since January this year and the plan is having them paid off completely before the end of 2017/ THAT will be a huuuuge breath of fresh air.

  • avatar
    eggsalad

    You forget that the entire concept of “subprime” borrowers is made up BS by the banking industry. Credit scores are based on algorithms that are proprietary and the bankers won’t even tell you how they are calculated.

    The whole thing reeks of scam.

    Yes, my score is over 800, but the only way I got it there (and keep it there) is by borrowing money I don’t need to borrow, just so I can prove I make my payments on time.

    Every year, I take out a secured $1000 loan at my credit union. Because it’s secured, the interest rate is 3.1%. I park the money in my savings account and let them take automatic payments.

    I basically pay $20/year in interest just to keep my credit score up, on the off chance I need to borrow real money sometime.

    I’m basically forced by the system to pay graft money to keep my score up. If that isn’t a scam, what is??

    • 0 avatar
      everybodyhatesscott

      Couldn’t you just use a credit card and pay it off every month? That’s how I got my score pretty good. I’ve never had a car payment.

      • 0 avatar
        eggsalad

        It appears (but of course you can’t prove it, because the algorithms are proprietary) that credit card “revolving” and fixed loan “installment” payments are differently scored and you need both to have a good credit score. Since I don’t have a mortgage, I need installment debt.

    • 0 avatar
      Chan

      I suppose this depends on your consumption patterns. Yes, it’s scammy that I have to use a credit card to prove that I have good credit–what’s wrong with using debit cards and money that I actually have?

      But since credit cards are often free to use (paid on the backs of those in debt…….but that’s another issue), I use it, pay it all on time and I don’t complain too much.

    • 0 avatar
      FreedMike

      “Yes, my score is over 800, but the only way I got it there (and keep it there) is by borrowing money I don’t need to borrow, just so I can prove I make my payments on time.”

      If you hadn’t borrowed any money ever, then you woulddn’t have a 800 score.

    • 0 avatar
      r129

      The way I keep my credit score over 800 is by applying for a new credit card every 18 months or so (or whatever the 0% interest period is). Whatever credit card I apply for usually comes with a signup bonus of $150-$300, plus the ability to earn more points. If I have a large expense or a vacation, I might carry a balance at 0% for several months, even though I could pay it off all at once. Once the promotional period is over, the balance is paid off, and the card goes into hibernation. Then it’s time to apply for the next one. This way, I’m actually making money by playing the game. Every so often I’ll bring a card out of retirement to keep it active, paying it off in full of course. I always say you can never have too many credit cards! I’m surprised by the number of people who are extremely reluctant to open new cards. I suppose it could be bad if you have no self control.

      • 0 avatar
        dal20402

        I’ve had the same two credit cards for a decade and my score is over 800. I think you may be overthinking things a bit.

        • 0 avatar
          r129

          Having one or two good cards and actually using them and paying them off isn’t a bad thing. I’m the kind of person who enjoys stacking coupons and sales, so for me it’s a fun game to collect these cards – they’re like trading cards! Each credit card has different bonus categories every quarter and special shopping portals. When I bought a new dishwasher, I went into my credit card archive and dug out a Chase card I hadn’t used in years, which just happened to offer 5% cash back on department store purchases that quarter plus a 5% off shopping portal at Sears, which I combined with a Sears coupon code, plus I received $50 back in Shop Your Way Rewards points. So much fun! It also explains why Sears is doing so poorly. But I can see how that’s not for everyone…

      • 0 avatar
        Scoutdude

        I’m sorry but you are not doing yourself any favors. When it comes time to get a mortgage that dreaded “high available revolvng credit limit”, “new acct” or “length of history too short” as a reason why your sore is what it is. Canceling the cards isn’t good for your score either. When my wife and I went to refinance our 2nd house I got dinged because we had consolidated from 2 separate Discover card accounts into one joint account.

        I’m afraid what our scores looks like now that Costco switched from AmEx to Citibank Visa. I had a AmEx long before Costco switched from their private branded car to AmEx and made the mistake of accepting the combination of the accounts.

        On the other hand in the last year I paid off 3 mortgages and rolled the proceeds of those sales into cash purchases and one with a larger loan. Unfortunately with today’s rules it is much harder to get a 5th non-primary residence mortgage at reasonable rates and w/o 6 or more months of reserves to cover all 6 mortgages. Back before the mortgage fiasco there were no crazy restrictions or rates for that 4th or more investment mortgage.

        • 0 avatar
          r129

          I never had a problem getting a mortgage at an excellent rate either time that I purchased a home. Perhaps it could be a problem if you’re going for a 4th or 5th mortgage, but I don’t see myself doing that any time soon. I have maintained my oldest cards (10+ years) to make sure they stay open, thus keeping my age of accounts higher. If anything, it offers additional protection for my age of accounts if I have several long standing accounts, then if one closes down or changes to a different bank (like the GM card did), I will still have the others open. Not every single card I’ve ever opened is still active. I add new accounts at a steady rate, 18-24 months apart. I could see maybe getting into trouble if I applied for several new accounts in a year, and closed all of my oldest ones. I guess I’ll believe my method is a problem if I ever encounter difficulty getting any type of loan.

          • 0 avatar
            Scoutdude

            If you’re at the point where you have got 2 mortgages stop playing the game it truely isn’t getting you anywhere.

            Funny thing the last time we got a car loan. We went to our credit union neighborhood center and started the process. When it spit out the report that showed 7 mortgages at first she was “I show 7 mortgages is that right???” “That can’t be right” I said yes and 6 of those are on income producing investments and the loan balances are all less than 50% of the value of the property they are for. She said OK, hit submit and a couple of min later she said you are approved for $50K. We then went to the credit union direct dealer that had the car we wanted and got our $16k loan. Of course the F&I guy said why do you want to put so much down on a depreciating asset? I said because my wife is going to drive the hell out of that car and I’d rather not find myself upside down. That paid off when it was totaled before the loan was paid off and the car had super high miles from it averaging 32K per year while we had it.

    • 0 avatar
      dal20402

      What everybodyhatesscott said. Just get a card with no annual fee, use it for your daily expenses, and pay it off in full every month. You won’t pay interest and your score will do fine. And if you choose your card right you’ll probably get 1% to 1.5% back in some form or other.

      • 0 avatar
        brettc

        That is what the wife and I do. Score is in the high tier 1 range with 16 years of on-time payments.

        Credit is tricky and things can go downhill fast with even the small problems that happen in life.

  • avatar
    5280thinair

    On top of many of the interesting comments above, I’d like to point out that, even with training, a sizable chunk of the population simply can’t wrap their heads around modern finances. Some people are simply bad at math. Others have minds that just don’t work well dealing with longer-term scenarios, they can handle today and tomorrow and anything beyond that will just have to take care of itself. Some here will think that means those or “bad” or “stupid” people, but in my experience that often isn’t the case. Their brains often work very well in other areas and they can be highly competent there, but are hopeless when it comes to finances and long-term decision making.

    I know folks who are by no means stupid, but have had to resort to keeping multiple bank accounts (each one to collect money for and to pay different types of major type of bills) because that’s the only way they could make it work. To me it seems ridiculously complex, but for them it’s just plain works. However, car (and other purchase) financing in this world is set up for those who can deal with some degree of complexity and certain sets of rules, and by and large those who can’t are in trouble. Best for those folks to go cash/only or otherwise come up with systems that work for them.

    • 0 avatar
      JimZ

      or it just becomes “normal.”

      http://www.cracked.com/blog/the-5-stupidest-habits-you-develop-growing-up-poor/

      “When you live in poverty, you’re used to your bank account revolving very tightly around a balance of zero. Your work money comes in and goes right back out to bills, leaving you breaking even each month (if you’re lucky). That’s the life you’ve gotten used to. It’s normal for you.”

      • 0 avatar
        everybodyhatesscott

        I know people who make 100k a year who that article could apply to and are a job loss away from the poor house but it’s still because of bad choices. Heck, I’ve got clients who make 200k a year like that. It’s not like I don’t have sympathy for these people. How are you supposed to learn good habits when your parents teach you crappy habits?

        And that eating healthy is hard is crap. I didn’t eat any fresh food when I was growing up. And it’s not because my family was poor, it’s because my parents were cheap. Lotta boxed macaroni, canned fruits and vegetables, and casseroles. I still hate casseroles. It took me a long time to realize my family was extremely well off because of how below our means we lived.

        • 0 avatar
          Lorenzo

          There’s living below your means and saving a bit every month, and there’s living so cheaply that you fool everyone into believing that you’re dirt poor. I’m the former, my late father, an old New England farmer, was the latter, but he never cheaped out on food.

    • 0 avatar
      Pete Zaitcev

      I think that people who go far enough to set up multiply accounts should be able to switch to buying cars for cash. This may be disadvantageous compared to the proper hustling, but still better than being taken to cleaners by the finance department. I am one of those idiots and it only took me 2 cars to go cash on the 3rd (I did not even trade in, because the 2nd became worthless by that point – I eventually sold it to a friend for $850).

  • avatar
    06V66speed

    Yeah, well… at the rate this country is going, there will likely by more emphasis made on extending loans for subprime borrowers.

    With a rising cost of living and relatively stagnant wages, the number of working poor is ever increasing.

    My lady helps run a real estate firm that is growing at an extremely large rate. So large that they have plans to extend into several states within the next year.

    Where am I going with this? Well, they literally just merged with a broker that actually buys a home that the person applying wants (so long as it meets specific criteria), and they will rent the home to the borrower. Once the home has been rented for five years, you then have an option to buy it. Maybe this isn’t anything new, but frankly- these people don’t much give a sh*t about your credit score. So long as you make at least $50K a year, have a semi-decent criminal history, and no pending bankruptcies.

    So if you have good credit, GREAT. Good for you.

    We’re approaching a day and age where there will be more options for people that fit that mold. And if real estate brokers and lenders can do this, the automotive industry and its financiers will follow suit.

    And yes, these people will get to negotiate. Eventually.

    Cheers.

    • 0 avatar

      The rent to buy scam. Adds the worst parts of ownership to the worst parts of rentals. You don’t own it, you are paying rent, but most of the time you are responsible for the maintenance. An option to buy is just that…I’d love to see the contract. Who can predict interest rates in five years…? This is illegal in many states.

      Amazing how being poor screws you here too. If you live in a mobile home, you don’t own anything, but the trailer and you pay rent on the land….equity ? Stop laughing.

  • avatar

    Subprime is an intrinsic part of the auto business, been like that for decades.
    Getting a subprime customer approved for credit requires a specific knowledge base and skill set to deal with the various financial institutions that have a subprime division.
    In most instances a customer is approved for the most credit they can get, and then a vehicle is chosen to fit the credit amount that is approved.
    Is the customer a victim or is he being helped. Many dealers with subprime customers will pull them in after 12-18 months, now they have a better score, start over on a different vehicle at a lower rate.
    In addition many financial institutions dealing with subprime will hold back an amount from the dealer to cover the risk.

  • avatar

    Almost all of my problems, be they financial or otherwise, are mostly because of decisions that I’ve made myself, things I’ve either done or not gotten done. Maybe it’s wrong to assume that applies to everyone.

    Traditional sources of wisdom say that if you have the power to screw things up, you have the power to fix them.

    • 0 avatar
      indi500fan

      It would be interesting to see how this correlates with the number of people not having been raised by two married parents. I’d guess that’s a much bigger factor than race or income.

  • avatar
    ceipower

    I think in all fairness you need to add Chevrolet to your list of subprime feeders.

  • avatar
    danio3834

    Ugh, I just went through this for a family member. Talk about brain damage. They planned to ask me for an employee discount addendum, but I only found out about this after they had signed a terrible deal. Every BS doc fee, and lot pack crapola you can think of, plus extended warranty, undercoat all wrapped into a 10k rate bumped financing deal. Plus they stole the trade.

    They shopped the payment and ignorantly believed that because they have poor credit that they were obliged to sign anything put in front of them. I marked up the deal and sent it back to them with specific instructions, but they didn’t feel like they had any leverage to save themselves from financial oblivion and didn’t do anything with it.

    I spent the better part of this afternoon on the phone today stripping the deal with the sales manager at the dealer. My only real leverage being in a position of corporate power over him. Otherwise they would have had no chance. I’ll never get that part of my life back.

    • 0 avatar
      VoGo

      You’re a kind soul for stepping in. Unfortunately, most people getting screwed by dealers don’t have a Danio to help them out, and the cycle continues.

      • 0 avatar
        danio3834

        Honestly, these people would have been best to never set foot in a new car dealer. They had a good used car that wasn’t costing them money. They’ve been on a track back to financial health, but there was no turning back when that new car “want” set in and they fell off the wagon.

        No amount of information on my part was going to talk them out of it. So the best I could do was to minimize the damage.

    • 0 avatar
      tresmonos

      Good on you, danio. I had a sibling get blind sided by a dealer. In the end, my sibling’s pride got in the way and I never had my way with the service dept.

      Though I wonder how far the regional service rep would have gone.

  • avatar
    28-Cars-Later

    “I think our financial system is dangerous and _could_ create great problems for the real economy. But I also believe you cannot enrich a country by impoverishing it’s people. I do not believe that the health of an economy is measured by the profitability of it’s corporations. I believe profits are important, but even more important, is the health of the population in terms of participation.”

    Sir James Goldsmith, 1995.

    • 0 avatar
      VoGo

      You would think that someone so wealthy would know when to use an apostrophe. Or the difference between improvise and impoverish. Dropping out of Eton at 16 may be the cause.

      • 0 avatar
        28-Cars-Later

        I quoted a video interview, the punctuation is my interpretation and any spelling error my mistake.

        youtu.be/wwmOkaKh3-s?t=3134

        Whatever his ulterior motives, this man was a legitimate billionaire in mid 90s dollars and spoke for the so called “99%” while Bubba sold them out. Yes we can!

  • avatar
    Mackie

    Geez, lighten up on the Nissan hate already…

    Full disclosure: Micra owner. Perfectly fine city car and the price is right—and no, I don’t have shitty credit. Spending more for magic seats won’t make one damn difference in my life.

  • avatar

    I’ve done far too many subprime deals to have sympathy for any more than maybe 20% of them. I’m talking about DEEP subprime people – not a few blemishes, a divorce, a failed business – no, people who simply do not pay anyone. Not their apartment complex, not the cable company, not ANYone.

    I’ve seen returned checks from Pizza Hut on a bureau pull.

    I’ve told a guy straight to his face, “Why are you so stuck on payments? You’re not going to make more than six of them anyway.” He looked at me again for a few seconds, shrugged, signed, and drove off. Got repo’d four months later, then came back trying to get ANOTHER loan!

    Yes, there is a reason why these people are T/D for CHRONIC DEROGATORY CREDIT. They really don’t care about paying people.

    And its NOT for lack of money. They make it. Somehow. Usually some blend of the wife…I mean, “co-habitant’s” job, SSD checks for each child since they’re ALL disabled apparently, and him ‘hustling’ on the side. I’ve seen $6000/mo in valid, provable income and a FICO of 486.

    Why?

    Not caring. About anything.

    Simply put, I see far too many repossessions at the auction with aftermarket wheels, tint, and loose cables in the trunk for audio equipment to really feel bad about someone who spent hundreds of dollars on junk instead of their payments. And when you buy that sled and have to replace a burned headliner, all four tires, respray both bumpers, PDR the whole car, flush all the disgusting fluids, and pay extra to douche out whatever disgusting morass has formed on the interior of a 3 year old Altima, you realize that person didn’t deserve a car in the first place.

    • 0 avatar
      kvndoom

      No different than working rent-to-own, which I suffered through from 1998 to 2000.

      One thing I guarantee you every single one of those people DO pay on time is cable. They will not ever EVER go without television. Electricity and cable (the only 2 utilities required to watch football / reality shows / soap operas) get paid. Period. Everything else is optional.

    • 0 avatar
      tresmonos

      F*ck. Kind of takes the meaning out of work. For everybody.

    • 0 avatar
      MWolf

      I don’t feel bad for them, either (not the type you just described, at least). I was sub prime, myself. I never did any of that, and I never wanted to miss payments, things just got out of hand, and I was too young and stupid to handle it the right way.

      But my GOD, when you can see that much indifference and unwillingness to change, and how they neglect everything, it is infuriating.

    • 0 avatar
      SCE to AUX

      W. Edwards Deming once defined “quality” as pride in workmanship. Without some pride, you get poor quality.

      My first response to your story is “how can such people sleep at night?” But I suspect they can, and it’s because they’ve never been taught to take a little pride in their self-conduct. The ramifications of such an upbringing are wide-ranging and alarming.

    • 0 avatar

      Yep these people are out there. I had a few customers like this back in the day (oddly most of mine owned small business or ran under the table ones). A few actually had serious cash (literal cash). There are also people who were good normal financial responsible people but got burned and now feel the system is pointless. Last year I was listening to a talk radio program about millennial spending at the end of the segment they asked the next guest, a political commentator about finance and they got an unexpected answer. It seems she had a house foreclosed on it was then sold for far less then her equity in the house after she had tried to get them to short sale it. She then decided money was not real, sublets an apartment for cash and stopped paying pretty much every bill. She said she had since been to court 4 times for old debts and had won every one because of paperwork issues. I wish I could find a recording of it because the hosts were dumbfounded and quickly moved on.

  • avatar
    shaker

    Let’s try this:

    The “financial industry” is so bad with money, so greedy, stupid and wasteful, that they destroyed the economy, and got a well-deserved dick-slapping with the implementation of consumer protections by Liz Warren, et. al.

    Their response was to find every loophole that they could to re-write the arcane rules that they established to whittle away at FICO (and more obscure derivative) scores to effectively raise interest rates, since they can’t raise them overtly until the Fed gives them some cover by going above, say 0.5%.

    I realize that I’m blaming the victims, here – banks have to own huge buildings, and advertise constantly on TV, and pay their CEO’s, CFO’s and big players in the millions, because that’s their “lot in life”, it’s the terrible legacy that they were born into. Just because they need a little government help every now and again doesn’t mean that we should look down on them.

    They barely make it from quarter to quarter, because they have to pay outrageous interest rates of 0.05%, while taking in a few billion by charging 12-25% on unsecured loans — why they barely have enough money to survive, so sometimes, they have to open accounts in people’s names without their permission, or make some risky plays in the real estate or stock market just to survive.

    “Sub Prime” should refer to the ethics of the biggest crybabies in our economy, not the few consumers that emulate their “role model”.

  • avatar
    Pete Zaitcev

    I was just about to type a screed proving Bark a dumb hater with an agenda upon the example of a friend giving me a ride in his GT-R once, but then I remembered that Versa Note is a surprisingly terrible car. In fact, I like Yaris much better. Unfortunately I had to become well familiar with both of them, as well as previous generation Fit (before 2015). I asked myself, why is Versa (Note) so popular? It’s objectively a worse-than-bad car (except, strangely enough, the CVT — I have no complaints about it). Maybe it’s just cheap? Or… maybe Bark is right? Finding that the case would be a new and exciting experience.

  • avatar
    MWolf

    After my own sub-prime adventures, I DO have useful knowledge. Research everything, including your credit report, things you have resolved can show as not resolved, fix it. Stick to a price, don’t go over more than a grand. Don’t let them talk you into anything without asking questions (gap insurance, warranties, etc). Warranty might be good, depends on cost, duration, and what it covers. Do consider used first. You can get a LOT of useful car for 10 grand, or even less. This “NEW CAR 84 MONTH FINANCING” is a HORRID idea, especially with financial instability. Buying used? A seven year term is just insane. Negotiate? Let me be the first to say, if someone doesn’t give you a deal, someone else will. Once you have 6 months or so of on time payments, refinance and get lower interest, if you’re doing MUCH better, get a shorter term, too.

    I’m glad I’ve recovered my credit, and I never expected sympathy. I was mildly irritated at some dealers for the way I was treated after I explained that I was rebuilding my credit. One didn’t even call me about the status of an application, and seemed irritated when I touched base (I won’t be back). I found a nice local GM dealer by chance, told them what I needed in a vehicle, what my budget was, and informed them of my credit issues. The next day, I had a vehicle (used, but just five years old, no crazy terms, and acceptable interest that wasn’t as crazy as I had expected) that met all those requirements, and I didn’t feel looked down upon ONCE. “We’ll get you in something at the right price. Don’t worry. I will call you once I work it out.”

    Now THAT place will always get my business. It was, hands down, the best customer service I had received.

    • 0 avatar
      SCE to AUX

      I’ve been asked to help a new acquaintance find a larger vehicle for her growing family. Soon, she won’t legally be able to fit her kids inside the car she has now.

      Unfortunately, she’s way underwater on her used car, which she bought 3 years ago with a 7-year term. She’s going to have to roll the lost equity into the next loan, and go backwards in car age just to make this work. Plus, she’s racking up credit card debt to make ends meet.

      It’s a situation with no good answers, except significant behavioral changes over a long period of time.

  • avatar
    chiefmonkey

    And I thought Kia was finally making good cars…

  • avatar
    chris8017

    As I get older I witness more and more of my friends and family committing financial suicide. I have a buddy who is a mechanic and just bought a loaded Toyota Tundra for a total price higher than his ANNUAL salary. He was complaining to me one night on the phone about his truck payments, gas and insurance and how it was killing him. I inquired what the problem is and I come to find out he put $5k down on the truck and therefore has an absurd monthly payment despite being spread out over 72 or 84 months – I forget which. He also told me the interest rate which I forget but it was close to 10%APR. He has a bad driving record so between payment, insurance and gas his vehicle is costing him around $1200 a month. $1200. This is just moronic. Every car he has had looks half destroyed after 2-3 years. His last care was so filthy and had so much junk inside it I thought he was living out of his car.

  • avatar
    DirtRoads

    Another comment that will get lost in the vast wilderness of the internet, but BARK:

    “…which explains all the FoSTs parked behind restaurants and tire shops.”

    and tire shops :) I loved it. :)


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