The pandemic, if anything, saw the divide between rich and poor they grow wider and wider, and no only the super-rich, with the world of car loans, a goal as good as any other. Subprime lenders – or those with the weakest credit histories – are lagging behind, according to a new report.
Subprime borrowers tend to get the highest interest rates on car loans because they have poor credit scores, which, on paper, makes sense because the lender takes more risks, but in the real world they set up a lot of people. poor to fail. This is especially true in a pandemic economy where a lot of working class jobs – like the bartender – simply don’t exist.
from The Wall Street Journal:
About 10.9% of subprime borrowers with outstanding car loans or leases exceeded their maturity in February, up from 10.7% in January and 8.7% a year earlier, according to credit reporting company TransUnion. It marked the sixth consecutive month-on-month increase and the highest level of monthly data, which returns in January 2019.
More than 9% of subprime car lenders exceeded the maturity of more than 60 days in the fourth quarter, the highest quarterly figure in 2005.
What happens after you are long behind on the car loan is usually the recovery or loan that takes back the collateral, but this is not always the end of the story either. The WSJ story has a few stories about woe, but none as annoying as this one:
Nick Goodwin was about to start truck school when the pandemic struck and he did not qualify for unemployment benefits. But with his jobless girlfriend, he called his car lender for help. The lender, Westlake Services LLC, said it did not qualify for the exemption because it did not lag behind in its payments.
Mr. Goodwin began missing out on a monthly payment of about $ 560 on a Dodge Ram in May. “Things are starting to get tough,” he said. “None of us [were] work; I do secondary work to try to fight to take care of our children. ”
Westlake gave him several extensions that prevented the truck from recovering. But when they ended, Mr. Goodwin was still unable to pay his monthly bill, and the truck was recovered in October. Mr Goodwin said a family friend gave him about $ 900 to get him back. He later received several monthly extensions because he could not pay the bill.
A Westlake official said the company “strives to keep all lines of communication open to our customers and provide as much help as possible to those in immediate difficulty.”
Mr Goodwin said he and his girlfriend had recently found work and were making payments. But I can’t use the truck because it was damaged during recovery and needs a new transmission, he said.
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I guess Mr. Goodwin isn’t making payments on a Dodge Ram yet, but rather on a Ram, because the Dodge Ram hasn’t been around for more than a decade, but damn it, if someone picked up my car and stocked the transmission in process (perhaps when towing) and then returned it to me, I would be so fucking crazy. We hope Mr. Goodwin is in touch with a good lawyer.
And the easy reaction here is always to embarrass people because they took out loans that they can’t afford in the end, but I hope that last year led some people to reconsider this view, given the economic calamity. Because, if you’ve ever been in a serious situation, you know you’ve reached the final options.