The lender offered Woodrum various options to catch up, but the payments came to $750 a month including insurance. Over time, those payments became out of his reach. Eventually, Woodrum fell so far behind that the lender had to repossess the truck. Automotive industry website Jalopnik detailed Woodrum’s plight. You’ve likely heard these stories before. The everyone-qualifies “liar” loans like these echo the bad mortgages of the housing crisis... Welcome to the business of extending subprime auto loans to people for cars they can’t afford. These stories are tragic for the exact reason that they are common. People need cars. Whether it’s because they need to get to work or because they need to transport their children, Americans need automobiles. The farther people live from heavily urban areas, the more transportation becomes an issue. So when people want to buy a car – even if their credit is subprime – they often stretch and purchase something they really can’t afford. The past 10 years or so have been a perfect environment for these kinds of slippery loans. And it’s not just auto lending... In the past decade, students (most of whom have virtually no income) have racked up enormous debts, which currently total about $1.5 trillion. Incredibly, that’s what our entire federal government owed a little more than
These stories are tragic for the exact reason that they are common.
The payments over six years totaled $45,000 – double the truck’s original price. Though the payments were high, Woodrum needed a job... and a car. He thought he would find a way to make it work... So he signed the loan agreement. The dealer didn’t seem concerned. You can guess what happened next... Within a few years, he ran into trouble making his payments.
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American Consequences 51
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