Predators Just Move On

Apr 14, 2011 | By: Mr_Blue | Tags: capitalism, auto loans, predatory lending, predatory

It’s the nature of capitalism today. Once one area is sucked dry or the predatory scheme is uncovered these predators move to another area. Now, the predators have moved on to auto loans.

Center of Public Integrity’s released a very informative report called Buyer beware. Here are a few excerpts from the report (I strongly encourage people to read the entire report):

The politically powerful industry has also mastered a few high-pressure tactics of its own. Chief among them is the “yo-yo,” where dealers let buyers drive a new car home in hopes of locking them into a deal and later tell them their financing fell through. The tactic can lure buyers to accept a higher interest rate.

And while the financial crisis rendered subprime mortgages extinct, Wall Street is once again buying up bundled subprime auto loans, fueling a market aimed at the most vulnerable consumers and relieving dealers of the risks of making bad loans.

While the consumer thinks the negotiations are over at that point, dealers know that a lot more profit can be made off the financing.

For starters, dealers routinely jack up the interest rate on a loan and split the profit with the lender. So if you qualify for a 4 percent loan, the dealer will say the best he can do is 7 percent. Half of the extra profit goes to the dealer as a “markup.”

Buyers never know they’ve been charged more because the markup usually isn’t disclosed. The Center for Responsible Lending calls these “kickbacks” and calculates that they cost car buyers $20 billion a year.

It should be no surprise that new Consumer Financial Protection Bureau is powerless against these predators. The auto dealers/lenders secured an exemptions from the new consumer protection law. Money speaks volumes in Washington.

Here are the key finding of the Center for Public Integrity’s report.

The best defense is the best offense against predatory lenders. We have to arm ourselves with information and an understanding of what the predatory practices are so that when we experience them we know to just walk away. The Center for Responsible Lending has a wealth of information about auto loans and the predatory practices. Please check them out before making that next auto purchase.

Another thing: if you don’t know or not sure about something - ask someone before you sign on the line (other than the dealer) - a neighbor, friend or us. We can no longer expect or afford to wait for our government to protect us from predators. We are in this together.

Good luck.

 

 

 

blog comments powered by Disqus

image

economy financial+crisis budget+deficit obama unemployment jobs credit+cards debt social+security personal+finance capitalism deficit bailout mortgage mortgage+crisis economic+crisis wall+street+bailout new+economy job+guarantee retirement+savings cooperatives credit+unions deficit+hawks economic+stimulus income+inequality health+care+reform financial+regulatory+reform worker+cooperatives gdp federal+debt financial+conglomerates tarp financial+oligarchy 401k money scams fiat+currency debt+management new+normal wall+street middle+class investing consumer+debt investments china economic+growth wages federal+reserve globalization savings consumer+protection stimulus neoliberal unemployment+rate tax+cuts risk foreclosure budget financial+planning credit+card+debt debt+settlement federal+deficit democrats republicans stocks government+spending negative+equity foreclosures move+your+money full+employment modern+monetary+theory stock+market neo-liberal checking economic+policy u.s.+treasuries job+growth bonds economic+mobility bank+of+america foreclosure+fraud taxes consumer+spending cfpa ira inflation class+war jobs+report financial+bailout fiscal+policy evil pete+peterson health+care financial+literacy jobs+crisis currency monthly+budget wills economics #finreg tbtf estate+planning consumer+credit gold+standard debt+ceiling auto+industry president+obama center+for+responsible+lending mutual+funds innocent+fraud aig life+insurance personal+income market+fundamentalism consumer+financial+protection+agency trade+deficit banking identity+theft cash+flow compound+interest fraud too+big+to+fail predatory fdic state+of+the+union net+worth u.s.+treasury+securities class+warfare bankruptcy derivatives goldman+sachs mortgages debt+consolidation eu great+recession gold keynes refinance fico+scores debt+crisis credit+scores real+estate mortgage+foreclosure financial+regulation banking+system federal+budget de-regulation financial+crisis+inquiry+commission deficit+commission debt+servitude krugman free+trade solidarity wisconsin income+tax refinancing debt+collection loan+modifications trickle+down+economics financial+stability+plan poverty retirement working+class online+scams income+taxes investment inequality community+gardens economic community+banks debt+to+gdp recession austerity email beige+book mortgage+modifications yuan risk-return investment+advice estate investment+yields happy+year finreg hyman+minsky american+dream malicious+software deflation corporate+bailouts federal business+roundtable cooperation dot+com+bubble leading+economic+indicators deferred+annuities bailouts economic+policies balancing+checkbook alternatives returns housing+bubble chris+dodd lei fixed+rate+annuity lobbyists debt+is+evil disability+income+insurance scam fiscal+sustainability home+mortgage insurance variable+rate+annuity corporate+tax+breaks credit+card+law deficit+spending tina balance+check+book credit+report teach-in currency+manipulation bill+gross foreclosure+rescue+services gross+domestic+product race+to+bottom big+banks marx june+jobs+report general+motors economic+indicators budgeting financialization warren+mosler washington+consensus emergency new+capitalist+manifesto bank+fees credit+card minsky tips open+auction lost+decade financial+genocide republican+budget human+capital direct+deposit reaganomics overdraft cfpb galbraith social+security+cards geithner commercial+real+estate direct+jobs+program civil+disobedience balance etf economic+justice barack+obama worker+ownership personal+consumption treasuries protests gas+prices obama+administration destruction citizens+united outlays wall+street+bailouts exports household+debt fallacy+of+composition securities+laws save public+option living+standard unions july+2011 unemployment+benefits imports card+act fallacies auto+loans emergency+funds deductibles strategic+defaults keynesian wiped+out productivity+ralph+nader new+era+windows laid+off citigroup financial+sector foreclosure+gate fox+news+channel human+capitalism savings+tip financial+reform arra free+credit+report chicago money+market+accounts unemployment+insurance money+market+mutual+funds afl-cio fox move+money predatory+lending credit+rating+agencies credit+reports fallacy uaw employment principal+reduction roger+ailes close+banking+accounts countervailing+powers refund+anticipation+loans jobs+data moody's revolution tax+reform denmark propaganda banking+services john+k.+galbraith tax+refund debt+forgiveness lehman+brothers cornel+west exuberance disposable+income national+infrastructure+bank corporate+welfare u.s money+manager+capitalism birth+certificate monetary+policy option+arm mortgage+loan+modifications subprime+mortgages corporate+profits interest+rates greece quantitative+easing political+system fundamentals living+wage output+gap success consumption ltcm universal+health+care income+distribution household john+mccain minimum+wage new+democrat+coalition two+americas frontline senate+democrats eurozone debt+commission haymarket american+recovery+and+reinvestment+act oligarchy two+economies income regulations ben+bernanke california+budget catfood employee+ownership existing+home+sales jobless+recovery carried+interest john+edwards mark+to+market budgets payroll+tax euro chicago+idea paladino robert+reich gmac life+settlements tax+holiday ireland mlk fannie+mae housing+market cowards slavery dollar sector+balances target+date+mutual+funds argentina fierce subprime bad+bank bullshit phone+scams financial+regulations national+debt free+markets united+states now savings+plan alan+greenspan deficit+errorists payroll+tax+holiday time+value+of+money cost+of+unemployment ponzi+schemes swipe+fees savings+bonds shadow+banking+system fica+tax madison paulson future+value pensions fed+audit debit+cards credit+markets fair+debt+collection+practices+act tax+code #wallstreetscam great+divergence warren+buffett treasury+department present+value tax+deal cooperative+economy predatory+home+lenders cash cdo walker ppip job+loss 20-year+mortgage obama+tax+deal short+sales liquidity u.s.+debt poverty+rates conservatives home+buying economic+purgatory long+term+unemployment vicious+cycle cash+management treasury+securities detroit+schools home+closing banks deficit+hawk american+capitalism bartering emergency+savings efca debt+hysteria

Mythbusters - 300x250

TigerDirect