While i sympathize, with a high risk of default you need to charge very high interest rates and markups. You cannot get around the economics with a Care Bear stare.
When you are poor, you generally can't take advantage of buying in bulk, even things like toilet paper. I save a substantial amount of money (and time) now that I can buy larger quantities of things.
Now that I have a car again, I'm able to save a tremendous amount of time which I can use towards leisure or making more money.
Having access to credit now allows me to get 1.5% cash back on all my purchases, this adds up to a fair amount of money over a year.
There's a lot more, but these are a few examples I've experienced personally.
And no credit history is almost as bad as poor credit. If you have no credit history, you should expect to overpay when financing anything.
Seconding this. It took me a long time to get over my German Swiss aversion to consumer debt. You are certainly penalised for doing that in America--from getting an apartment to factoring invoices at my business, many things became harder.
It's easy to get a low limit store credit card ($250 limit) as someone with no credit history. It may have an annual fee. If you pay it off reliably over a year, pay the annual fee one time you will have a moderately good credit history. Then you can get another credit card with no annual fee and cancel the first one. Then keep this second one for decades, because it will show that your nearly oldest credit card account is still in good standing after many years.
As someone who has shared an apartment with a person with poor credit who is also a habitual liar and hides/blames others for their problems... I believe in giving people the opportunity to rebuild credit slowly, but have no problem whatsoever with limiting opportunities and charging those people more until they work to regain credibility.
The real long term solution is good public transit, so poor people don't have to go into debt to commute.
Transit will ultimately become a ubiquitous utility like running water.
Also, insurance should be cheaper and running costs ditto (presumably, the bulk of autonomous vehicles will be electric)
Besides, in some markets taxis ARE the cheaper option if you don't need a car very often - when living in Norway's #2 town about a decade ago, the annual road tax, insurance, leased parking space &c added up to a cost equivalent to more than 200 4-mile taxi rides. And that is leaving depreciation and maintenance out of it...
Bart, muni, caltrain, amtrak, etc -- thos should be 100% subsidized by taxes.
We have a gas tax that is so high in california it hasnt even done anything for our roads and infra.
You hae one of the biggest companies in the world (chevron) based out of richmond, ca (one of the poorest cities in CA) paying nothing in taxes...
the basic income argument is bullshit, and politicians are freaking morons given that they cant take the freaking hammer to corps so large that due to their financial extraction from basic human living (movement) that this problem will never be solved.
capitalism is a brainwashing technique, not a basis for a human economy.
I am not saying that we should be communist - but we shouldnt complain about problems without understanding the ripple effect of so many other problems and wwhen they reasonate together, such as not taxing gas corps, but increasing "gas tax", yet not using the gas tax properly -- then having public transport agencies in corruption quagmire - the world is basically fucked.
Why do bart train drivers work 4 days a week, yet make over 125K/year for baby-sitting an automated train, then go on strike for more money when the trains are filthy and smell like piss? Why do they have the "train of the future" when not a single new train car "of the future" has a power port/USB port? (yes I looked and spoke to them about it.
Why hasnt any bart/muni operator ever been forced to go on a field-trip to some other major metropolis to see how efficient, clean, modern travel infra works?
Why are we spinning our retarded wheels on automated driving when we need to fix public transport?
Its a complicated issue - but only corruption and greed are truly preventing progress, as the corruption and greed results in us not taxing the fuck out of gas - and investing in very robust transportation systems that should be subsidized by general taxes.
How about we just say that if you make less than $50K per year, ALL transport is free -- THEN you have greater opportunity to find a job >$50K and can start paying for your rides.
What's next, Bernie, do you believe that car ownership is a "right"?
Some things that were previously considered rights are no longer necessary or desirable as society advances (the right to own slaves) while other things that were not previously considered rights (guaranteed access to the internet) might start to make sense as our world changes around us.
You also bring up a good point that there are currently few instances where this has occurred, but that's sort of my point, that past standards are not always applicable to the future.
A market participant who engages in a very small number of borrowing transactions over a lifetime by definition has less available information than a lending institution.
For what it's worth I have a degree in economics, and in my experience I almost invariably hear this sort of characterization of economic systems as simple and Newtonian from people who are generally unfamiliar with contemporary economic theory.
The economy is a complex adaptive system that has a penchant for reaching inefficient local maxima. Not every market clears. It's quite plausible that subprime lending is one such example, a theory that is also well contained within the general heading of "market economics".
To use a rather odd analogy, imagine you're playing an RPG that becomes extremely easy as you advance in the game. Enemies just dying within 10 ft. of you. That's a shitty game. Earning that one extra dollar on the margin as you climb the economic hierarchy should be more difficult, not less.
I hate this idea that people wouldn't be motivated to earn more just because it's more challenging to do so. What kind of pathetic excuse for a human thinks like that? Our society is backwards.
And frankly, all of that is forgivable; what is not is when the dealers then use these remote GPS devices to disable the vehicles, with NO GODDAMN IDEA what the vehicle is currently doing: Sure, they could tell if it was on the highway but would they actually care? And what if the person is working a night job, as many in poverty do? How do they get home?
Or what about the case awhile back of the woman who's baby was in the damn car when it was towed?
I get it, it's a business risk, but these things are DESIGNED, purposely, to fuck people out of their money and do tons of damage besides that. Exactly how much is a bank allowed to ruin someones life over a CAR LOAN?
Crap like this is why we need a Consumers Bill of Rights.
Also, unless there is data, I don't believe a company would disable a car in a manner that would be unsafe for anyone, at the least since it's a massive liability for them and there's no reason to. If anything, the GPS/car disabling would allow for lower costs for buyers since there is less risk for the lender, which would benefit the buyers who are responsible.
These "tote-the-note" lots proliferate in low-income urban areas, and often offer sub-standard cars at higher prices than the traditional used car market, and top it off with really high interest rates. Often they will sell and repo the same cars over and over, taking payments and down payments until the buyer hits a streak of bad luck or poor decision making.
On one had, the fact that these dealers do repo cars so often sorta justifies the big interest rates - after all, why would you loan money at a higher risk without a higher return? The flip side is that this tends to be very bad for society as a whole, making it insanely more expensive to be poor.
They aren't just a lot, they are a high-default finance and repo operation also. They need to pay additional insurance, monitor their cars - their rates can't be great and every car requires some version of gap insurance on their end probably at least for a while if they're rolling these costs into the sale price and then requiring no or little down payment. I assume since they're smaller operations their money has a higher time-value to them -- i.e. if a higher than normal number of people pay late one month, they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate.
I don't think they are specifically out to mess up people's lives is all I'm saying, it's easy to get caught up in the emotional side of a car repossession but think about if a client didn't pay you and you were racking up credit card interest waiting for them so you can pay your own bills -- would you feel bad about taking back your work after a certain period of time?
When you're selling a Kia with a KBB of $3,000 for $13,000, I'm going to assume you've adequately "factored in your costs" without resorting to gap insurance (which is going to be huge, because the insurer is going to pay fair market on KBB, not what you sold the car for) other than (further) extortion.
> they may be late on their debt payments since I assume they have some type of line of credit and they themselves probably don't have the best rate.
Hah. I had to use a subprime dealer after my divorce (not to the extent of GPS / immobilization, but 'pricy'). A year or so after buying the car, I got a call from a bank that I didn't recognize, saying that I owed them $2,000. This was the same amount that I'd written on a check for the down payment on the car. Sure, a cancelled check stub saying "Sorry, I paid the dealer the down payment" cleared it up, but something was awry.
Six months later, their multiple locations are shut and another bank has them in court for breaches of contract that I think ended up as fraud proceedings against the dealership owners for multiple financing issues (mind you, they were both still driving their Bentleys)...
I’m not sure how you parsed that from my post - I didn’t ascribe any intent or motivation to any party.
First, search for "title loan", "payday loan", and "check loan" businesses. This anchors your search areas to places where predatory lending is profitable. Then search for "car dealership" and ignore any results that have a brand name or a large lot, as those are the new car dealers. You will find the used car dealers with smaller inventories.
If you can get a street-level view of the lot, and see signage about "buy here pay here" or "no credit check", you have a winner. These types of businesses are literally everywhere, from downtown in a big city to the no-name dealer set up on the largest highway passing through a semi-rural town in the middle of nowhere. You can find them wherever poor people are to be found in North America, because having a mostly reliable personal vehicle is often the unavoidable first step to climbing out of abject, destitute, hopeless poverty into a more comfortable (but still bleak) working-class existence.
It is not entirely clear to me whether anti-usury laws would help or hurt more. Clearly, these businesses are providing a vital service to the poor. But they are also providing it in such a way that their customers are more likely to remain poor.
Put into a metaphor, imagine you have 10 flotation rings. That's all you can afford to keep in inventory, but you're going to make a business of reselling them. Now, you could check satellite maps, and go door-to-door, selling them one at a time to confirmed pool owners as a prophylactic safety device. But those people have no pressure to buy. You'll get a lower price. So instead, you can go to public aquatic recreation hot spots, with no lifeguards--that is, no one else around to compete with your service--and wait. When someone starts drowning, someone will call out to you, "Hey! You! We need that, right now!" And you will say, "Certainly. That will be $15000. Don't worry, it's payable with no money down and 120 easy monthly installments of $100, with a final balloon payment of $3000. Sign here." Faced with the choice between paying it and letting someone drown, they pay. If a buoyancy-hawker was not there, that swimmer would drown. But since you were there, you just put someone in debt-slavery to you for the next decade or so. Profit! And then when that 10 years is up, they still don't have that $3000 all at once, so you can stick them again on their way out. Profit again!
Obviously, the best solution all around would be for the parks department to provide prepaid lifeguards for everyone at fair prices. But the people who can afford to pay for that would rather swim at their private club than at a nasty river bank with a bunch of poor people. "Why don't they just learn how to swim better?" they say. "If a $50 annual pool club membership is too much, maybe they shouldn't swim at all," they say. And so the situation persists.
Looking past the fact that I already gave you one example, how would they know? The GPS device knows where the vehicle is, what it's running state is, and that's it. They don't know if the vehicle is stopped helping another person on the side of the highway. It doesn't know if the driver just ran inside to get their kid from daycare. It doesn't know if the owner is at a doctor's appointment 40 miles from home.
And more to the point, it's not as if these solved a problem. Cars were repossessed aplenty before they were invented, the only difference is it used to be expensive, so a bank would work with the borrower to attempt to salvage the loan or at the very least, have to repossess the vehicle when the borrower was at home or at work. Now it's cheap to repo the car, so why bother? Why even notify the person other than with a text message, the Lender now has no reason to even attempt it, just repo the car, get it back on the lot and sell it to the next poor bastard who's desperate for a car.