The pandemic, if anything, has seen the divide between rich and poor growing ever wider, and not only the super rich, with the car loan world as good a lens as any other. Subprime lenders – or those with the worst credit history – are falling further and further behind, according to a new report.
Subprime lenders tend to get the highest interest rates on car loans because they have bad credit values, which makes sense on paper because the lender takes more risk but in the real world sets up very poor. to fail. This is especially true in a pandemic economy where many working class jobs, such as bar, simply do not exist.
Of The Wall Street Journal:
About 10.9% of subprime lenders with outstanding car loans or leases had more than 60 days expired in February, up from 10.7% in January and 8.7% a year earlier, according to credit reporting firm TransUnion. It was the sixth consecutive month-on-month increase and the highest level in monthly data since January 2019.
More than 9% of subprime car lenders passed more than 60 days in the fourth quarter, the highest quarterly figure in 2005.
What happens after you fall behind with your car loan is usually a takeback, or the lender takes back the collateral, but that’s not always the end of the story either. The WSJ story has some stories of woe, but nothing as furious as this:
Nick Goodwin was starting a trucking school when the pandemic hit and does not qualify for unemployment benefits. But when his girlfriend was out of work, he called his car borrower to ask for help. The lender, Westlake Services LLC, said he did not qualify for relief because he was not in arrears with his payments.
Mr. In May, Goodwin missed the monthly payment, a bill of about $ 560, on a Dodge Ram. “Things started to get difficult,” he said. “None of us [were] work; I do updates to try to scrape to take care of our kids. ”
Westlake gave him several extensions that prevented the truck from being taken back into possession. But when it ended, Mr. Goodwin still does not pay his monthly bill, and the truck was recharged in October. Mr. Goodwin said a family friend gave him about $ 900 to get it back. After that, he received more monthly extensions because he could not pay the bill.
A Westlake official said the company ‘keeps all communication channels open to our customers and provides as much assistance as possible to those who are suffering immediately. ‘
Mr. Goodwin said he and his girlfriend recently got a job and get paid. But they cannot use the truck because it was damaged during the takeover and needs a new transfer, he said.
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I assume that Mr. Goodwin does not still make payments with a Dodge Ram, but rather a Ram, because Dodge Ram has not existed for more than a decade, but, holy shit, if someone takes my car back and the transmission stops the process ( presumably during the tow) and then returned it to me like that, I would be so damn crazy. Hopefully Mr. Goodwin in touch with a good lawyer.
And the easy response here is always to embarrass people because they are taking out loans that they can ultimately not afford, but I hope that over the past year some people have been led to reconsider the view, given the economic disaster. Because if you’ve ever been in a dire situation, you know you’re the final option.