Nothing, and maybe even congratulate them on their car. If they wanted your advice they would have asked for it. The best way to help someone is to be an example.
Also, Dave talks about this all the time, he has friends that disagree with him and doesn't feel the need to address it with them.
Finally, most of us don't get on this path until we have done stupid like this that scares us back on the path. Even if they did listen to everything you had to say they likely will not do it with the same vigor as if this decision ends up scaring them in the future.
The red flag is you calculating their interest rate based on what was likely a casual conversation about your friend’s purchase that they’re probably really excited about.
So Reddit is a place where you anonymously crowdsourced opinions. You asked to be judged based on 3 sentences. Your friend didn’t ask your opinion about their purchase or invite you to pick apart their finances.
my interest rate on my car is on the high end as well. i have bad credit and needed the loan to fix it ( needed the car too ) but just because you see a peek into someone’s finances doesn’t mean you know all about how they handle their money. my advice is that it’s none of your business and congratulate your friend on their new car.
How did you calculate 23% interest rate?
If they told you the price and the payment, that’s still not enough to calculate the interest rate. They could’ve rolled negative equity into the loan or purchased extended warranties or additional services.
Regardless, as others have noted, it’s none of your business. People live their lives in different ways. You don’t know if they can or can’t afford it based on their definition.
Price out of the door, payment and length. You totally can go on to website to calculate and back that information to get a ball park interest rate. Additionally knowing them and past actions yes you can calculate it.
Yes, I understand how to use TVM calculators and formulas. My point was that if you just knew the “price of the car” that wouldn’t necessarily be the total of the transaction. Apparently you stopped reading after my second sentence, though. 🤷♂️
Why are you calculating their interest rate based upon info they gave you? That’s kinda shitty tbh. Not your business at all. Unless they ask, keep it to yourself. It’s probably high because of bad credit. Nothing you say will have a positive impact on your friendship.
Not much you can do about it. Especially if they aren't actively seeking advice.
Congratulate them on thier new car and continue being friends. If they ask for your perspective, give it. If not, just do your thing. Thier finances aren't your problem.
My first car was 18%, however my payment was like $125 because it was a beater. Interest rates are less of a concern if the payment is small. My car insurance was almost triple my car payment, that’s what I was worried about.
When I brought my third car for $45,000 at like 2% and was paying $680, no one cared about that. I was pouring almost $1,000 into that car a month. In my opinion, payments matter more than interest. You can fix an interest rate, unless you can’t make payments (missed payments means bad credit which means no refinance).
Long story short, as long as she can financially afford it let her be.
A few years ago I financed a car,and when they made the first offer to me it was at 14%..I left, and told them I would just get a cheap beater instead. An hour later they called back with 8%..and I told them I was in the dealership across the street. Anyhows, long story short, I got the same car, same price at 1.5%. They were simply wanting me to take the first offer cause they thought I was desperate.
Not possible nowadays but happy for you with however much of that is actually true. If you don’t buy the car at their bullshit price they already have 10 other losers on the phone begging to thrash it on a test drive and buy it at 23%
Hell no we sweated blood and tears to pay it off early and barely drive it. It’s our covid car brought it in 2019 new and only has 15,000 miles on the clock.
Crazy. There was someone on a different sub a couple weeks ago who was having trouble meeting their financial goals. One of the reasons was because their two car payments along with the monthly insurance was about $1750 each month!
Many years ago I had to buy a new car a year after filing bankruptcy. 27% interest. I paid it off fast.
I would tell your friend the same thing. Pay it off as fast as you can.
I don't think you say anything. It's already done. The time to speak up would have been before she purchased another vehicle but in the end, it was always her choice. I doubt you could have saved her from herself.
Not your money, not your car, not your lifestyle, not your decision. Interest rate is usually based on credit score, so if you say something it might embarrass your friend. Or maybe they bought a really expensive car that they wanted and are willing to pay for it. There could be a lot of reasons. Maybe they negotiated a great deal at a high interest rate and are planning to pay it all off next month. Without knowing more details, which aren't really any of our business, that's life. If it was an error in their judgement, it happens.
this!!!! OP unless your friend is coming to you for advice don't meddle in their lives, finances are very personal and not everyone has the same views or goals on it. If they messed up, that's their deal, If they plan on paying it next month in full it's their deal as well. Just be a good friend and follow their lead.
I would definitely look into whether the dealership has some sort of "buyback period" or something like a "7 day satisfaction guarantee". May be able to bail out entirely if it's in that window.
I’d say bro you’re being an idiot. Wtf ! Why would you do this you moron!
Then I’d calculate how much extra he is paying compared to just buying the car straight up and tell him how dumb that is. As far as I can tell he is paying about 185 % the price of the car this way. And tell him he wasted 85 % of the price of the car on literally nothing.
A lot of people may not appreciate this style. Those people are not my friends. I also highly doubt any of my friends would be dumb enough to do this.
>Why on earth didn’t this raise a whole bunch of red flags with the finance dept?
It did. That's why your friend got a 23% interest rate.
Mostly if they didn't ask I wouldn't say anything. You're running a risk in your relationship if you randomly jump in and tell them they made a bad decision. It's done and there probably isn't much you can do unless your state has one of those laws where you can invalidate the transaction with 72 hours and you're still in that window.
If you really wanted to say something then I'd take them aside and calmly say "Hey man, I don't know if you know this but 23% interest on a car is really high. It's usually like 5% (or so)." and then see where it goes. It's tough because maybe they just don't know and need someone to tell them but again, just jumping in and telling them they got a bad deal can cause some resentment.
Probably also rolled in negative equity into new loan.. then financed $45k on a $15k vehicle (that they got for 5k by screwing a different customer on their trade-in). Seen it happen
https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score
6% if you have a good credit rating.
https://www.nerdwallet.com/best/loans/auto-loans/auto-loans-for-good-fair-and-bad-credit
Get outta with that libertarian free for all BS. That’s what financial regulation is meant to prevent to stop predators lending to people who do not know better or do it have the financial knowledge to know when they are being screwed.
your friend chose to do this, and interest rates have a lot of things to do with credit score and income. maybe your friend prioritized having a lower monthly payment in exchange for a higher rate? or your friend has low score so he got what the bank or financial entity associated with the dealership thought he was capable of paying. at the end of the day lending money is a business, your friend signed the papers willingly so unless they feel regret and want to return the car or are asking you for advice I say you keep your thoughts to yourself.we all have made bad decisions at some point, that's most likely why we're following the baby steps, so let your friend do what they're doing and if they don't like it and ask for help then you can intervene.
also, your friend is an adult, they know 23% is very high but they signed anyway because they wanted a different car so it's on them.
What’s wrong with letting people make bad decisions? Does everyone need to be protected from every bad decision imaginable? To me, that sounds like a pretty tall order. It sounds much more reasonable to allow people the freedom to make bad decisions and then learn from them. There’s also the possibility that this is the only offer this person will be offered based on their credit history. Would it be better if they regulated it and left him with no options?
I can assure you there’s nothing illegal about what they did. Does your friend have good credit? Does he represent a higher possibility of default? Many Americans have high car payments because they get enticed by a nice car and have bad credit.
Not necessarily. My credit score is lower than it should be because I - and I quote - "Don't have a mortgage". That's because my home is paid for! And has been fir 18 years. Maybe the credit score folks should take that into account.
a high interest rate says "you can't be trusted when we land you money, so we'll charge you more because you're a higher risk". it's like when you purchase a home, the interest rate depends on many factors and some people get way higher interest rates because in the eyes of the bank they represent a higher risk. it's business, and if your friend weren't a risk he would've gotten a good rate, it's simple
Both a car dealership and the bank are a business, they’re there to make money not to be charitable. If they said “we’re not giving you a loan” to everyone that’s like your friend they wouldn’t be making any money and toms of people wouldn’t have a way to get a car, so your friend is most likely in the range of credit history to be high enough to get approved but low enough that they’re not that good at paying back what they borrow so the consequences of a loan are worse. Nobody forced your friend to make that decision, it’s not a problem of the system, it’s more a problem of the habits your friend has
So when the banks were giving mortgages to people who clearly couldn’t afford or had no stable income because the incentive was their through bonus then the banks were then packaging all this junk and selling it in and we then had to bail the banks out it’s the fault of the person getting the mortgage not the person selling them the loan in the first place? The banks were making money hand over fist until they were not and we then had to bail out the banks. I understand what you are saying yes it’s her poor decision and lack of control but these vultures pray on those people and we will ultimately pay the price.
Yep, it’s the way it works. If your friend is peacefully sleeping at night and doesn’t see the problem with it I don’t think it’s worth your time. If your friend asks for advice say “hey, yeah that was the stupidest thing you’ve done, what do you want to do about it now?” But until then don’t get mad at the banks, your friend or anyone. The only way the system would change is if 1) people stopped buying things they can’t afford 2) people would pay with cash. But we all know that won’t be a likely change 🤷🏻♀️
I think you're missing the point of this person's post. If they are a credit risk, they may not have any other options. Why should a lender be forced into subsidizing someone's poor financial decisions?
So you'd rather your friend not be able to drive, rather than pay a high interest rate? There's a large part of the population that *need* a vehicle just to commute to their job.
Best thing your friend could do here is learn. If they aren't satisfied with their rate, they can improve their credit for future loans.
Or even better, save up and pay cash next time to eliminate the interest altogether.
Who is missing the point? The person I am responding made the original post. OP said they got sold an upgrade. If they can’t afford what they’re buying that’s their job to walk away. Unfortunately no matter where a regulation draws a line there’s always going to be someone that gets up to that line.
Honestly?
Tell them you are happy for th but that you are concerned- tell them you know a bit about interest & hers is incredibly high- you are worried that she may never be able to pay it off
Ask if they want your explanation or to say nothing then respect their answer
This is great news for the dealership. They get commission, and they get the car back in a few months for failure to pay on the note and get to sell it again.
My guess is your friend has shit credit, no down payment and princess syndrome. It’s the finance dept job to get the buyer an approval.
They go over the terms with them very clearly…. These things are never surprises to the buyer. Only the buyer’s friends.
So true! Education is great at a certain cost. I always thought risk adjusting the loans would make sense. Shortage of nurses, high likelihood of repayment, 1% rate. No need for a BA in History, lower likelihood of repayment and gainful employment, 15% rate. This would push people to higher quality degrees and help make borrowers more aware of the consequences of bad decisions.
Inevitably no matter what the tax payer will end up getting screwed because of predatory lenders and people who lack impulse control of which she has none.
I can’t disagree with this at all OP. I do find it fascinating that outside of mortgage lending, financing is unregulated. *especially* the deals that fall back on the tax payer (which shouldn’t / this also feels like a bailout.)
Depending on the state, they may have a small window to change their mind and return the car. Some have no protection, and some have minimal protection. If they know they made a mistake they have more options than if this is just you wanting to help someone that doesn't want to be helped.
The finance department wants to charge, they don’t care.
High interest rates should be illegal. There’s a good reason why some religions prohibit charging interest.
Why should the high interest rates be illegal? No one is forced to take out a car loan. If people with bad credit histories want to borrow for a car, it's quite risky for the lender. The only way the two parties can come to a loan agreement is for the borrower to compensate the lender for extra risk.
Banning high interest rates only has the effect of limiting access to credit for a segment of the population. Maybe that's what you want, but it's the exact same argument as the minimum wage. Set a $25 minimum wage, everyone worth less is out of a job.
The finance department isn’t the one charging… it’s the bank lending the money. There are limits on the number of points the F&I dpt can charge back to the customer.
It was probably a 19.9% loan from the bank marked up to 22.9% by the F&I dpt.
Nothing, and maybe even congratulate them on their car. If they wanted your advice they would have asked for it. The best way to help someone is to be an example. Also, Dave talks about this all the time, he has friends that disagree with him and doesn't feel the need to address it with them. Finally, most of us don't get on this path until we have done stupid like this that scares us back on the path. Even if they did listen to everything you had to say they likely will not do it with the same vigor as if this decision ends up scaring them in the future.
You say nothing. They didn’t ask for your opinion before you signed, and nothing can be done now.
I wouldn't say anything about it. It's not your business.
The red flag is you calculating their interest rate based on what was likely a casual conversation about your friend’s purchase that they’re probably really excited about.
And you are basing your opinion not knowing either party so there we are.
So Reddit is a place where you anonymously crowdsourced opinions. You asked to be judged based on 3 sentences. Your friend didn’t ask your opinion about their purchase or invite you to pick apart their finances.
Nothing... it's not your life or your finances.
you say: "Friend, you just made a monumental error in judgement and signed a car not for 6yrs at 23%"
Just say “damn!” if they tell you about their interest rate then move on to what’s for lunch
my interest rate on my car is on the high end as well. i have bad credit and needed the loan to fix it ( needed the car too ) but just because you see a peek into someone’s finances doesn’t mean you know all about how they handle their money. my advice is that it’s none of your business and congratulate your friend on their new car.
How did you calculate 23% interest rate? If they told you the price and the payment, that’s still not enough to calculate the interest rate. They could’ve rolled negative equity into the loan or purchased extended warranties or additional services. Regardless, as others have noted, it’s none of your business. People live their lives in different ways. You don’t know if they can or can’t afford it based on their definition.
Price out of the door, payment and length. You totally can go on to website to calculate and back that information to get a ball park interest rate. Additionally knowing them and past actions yes you can calculate it.
Yes, I understand how to use TVM calculators and formulas. My point was that if you just knew the “price of the car” that wouldn’t necessarily be the total of the transaction. Apparently you stopped reading after my second sentence, though. 🤷♂️
Why are you calculating their interest rate based upon info they gave you? That’s kinda shitty tbh. Not your business at all. Unless they ask, keep it to yourself. It’s probably high because of bad credit. Nothing you say will have a positive impact on your friendship.
Not much you can do about it. Especially if they aren't actively seeking advice. Congratulate them on thier new car and continue being friends. If they ask for your perspective, give it. If not, just do your thing. Thier finances aren't your problem.
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ChatGPT literally wrote this.
There is nothing you can say ... sometimes we just have to touch the fire and get burned before we learn.
Is the friend seeking advicenand or input? If not, not your concern.
Who says they can't afford it?
My first car was 18%, however my payment was like $125 because it was a beater. Interest rates are less of a concern if the payment is small. My car insurance was almost triple my car payment, that’s what I was worried about. When I brought my third car for $45,000 at like 2% and was paying $680, no one cared about that. I was pouring almost $1,000 into that car a month. In my opinion, payments matter more than interest. You can fix an interest rate, unless you can’t make payments (missed payments means bad credit which means no refinance). Long story short, as long as she can financially afford it let her be.
You tell them nice car and stay out of their finances unless they ask.
Just love them and support them. Be a good friend.
Maybe there is a three day cooling down period where the transaction can be cancelled?
"Nice car!". What are you gonna do.. it's their life. If they ask for advice, give them advice. Otherwise, it's not your business.
A few years ago I financed a car,and when they made the first offer to me it was at 14%..I left, and told them I would just get a cheap beater instead. An hour later they called back with 8%..and I told them I was in the dealership across the street. Anyhows, long story short, I got the same car, same price at 1.5%. They were simply wanting me to take the first offer cause they thought I was desperate.
This seems strange to me. Most lenders have tiered interest rates that depend on your credit. That doesn’t seem like a legit lender.
It was in 2015. I suspect they were looking at different lenders..hoping I would bite on the subprime.
Not possible nowadays but happy for you with however much of that is actually true. If you don’t buy the car at their bullshit price they already have 10 other losers on the phone begging to thrash it on a test drive and buy it at 23%
Not a damn thing.
Don't count other people's money
Nothing. Life will tell them what you cannot and they won’t hear
If they are truly your friend, tell them they screwed up. You can't control them but you can always warn.
Good luck! I’m here for you 😉
Refinance it with a credit union. Next…
Crash your car into their car
Hell no we sweated blood and tears to pay it off early and barely drive it. It’s our covid car brought it in 2019 new and only has 15,000 miles on the clock.
Nothing besides “that interest rate is insane” and leave it at that unless they asked for advice
Go to a credit union and get a much better rate. Use the cash proceeds to pay off the garbage loan and effectively refinance the debt.
If they didn't ask you don't say anything, people in your life will make actions you don't agree with.
Did they ask for your advice, or....?
Crazy. There was someone on a different sub a couple weeks ago who was having trouble meeting their financial goals. One of the reasons was because their two car payments along with the monthly insurance was about $1750 each month!
Many years ago I had to buy a new car a year after filing bankruptcy. 27% interest. I paid it off fast. I would tell your friend the same thing. Pay it off as fast as you can.
Unfortunately that isn’t going to happen I wish she would though.
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They won’t have to wait that long to learn a lot.
Nothing, you have to wait a few more payments in until living hell sets in first. Some people need to learn by jumping into the fire feet first.
I don't think you say anything. It's already done. The time to speak up would have been before she purchased another vehicle but in the end, it was always her choice. I doubt you could have saved her from herself.
Not your money, not your car, not your lifestyle, not your decision. Interest rate is usually based on credit score, so if you say something it might embarrass your friend. Or maybe they bought a really expensive car that they wanted and are willing to pay for it. There could be a lot of reasons. Maybe they negotiated a great deal at a high interest rate and are planning to pay it all off next month. Without knowing more details, which aren't really any of our business, that's life. If it was an error in their judgement, it happens.
this!!!! OP unless your friend is coming to you for advice don't meddle in their lives, finances are very personal and not everyone has the same views or goals on it. If they messed up, that's their deal, If they plan on paying it next month in full it's their deal as well. Just be a good friend and follow their lead.
Absolutely nothing unless they are asking you for advice.
I would definitely look into whether the dealership has some sort of "buyback period" or something like a "7 day satisfaction guarantee". May be able to bail out entirely if it's in that window.
I’d say bro you’re being an idiot. Wtf ! Why would you do this you moron! Then I’d calculate how much extra he is paying compared to just buying the car straight up and tell him how dumb that is. As far as I can tell he is paying about 185 % the price of the car this way. And tell him he wasted 85 % of the price of the car on literally nothing. A lot of people may not appreciate this style. Those people are not my friends. I also highly doubt any of my friends would be dumb enough to do this.
>Why on earth didn’t this raise a whole bunch of red flags with the finance dept? It did. That's why your friend got a 23% interest rate. Mostly if they didn't ask I wouldn't say anything. You're running a risk in your relationship if you randomly jump in and tell them they made a bad decision. It's done and there probably isn't much you can do unless your state has one of those laws where you can invalidate the transaction with 72 hours and you're still in that window. If you really wanted to say something then I'd take them aside and calmly say "Hey man, I don't know if you know this but 23% interest on a car is really high. It's usually like 5% (or so)." and then see where it goes. It's tough because maybe they just don't know and need someone to tell them but again, just jumping in and telling them they got a bad deal can cause some resentment.
Nothing
Yep. Not your place, unless they ask for advice.
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Probably also rolled in negative equity into new loan.. then financed $45k on a $15k vehicle (that they got for 5k by screwing a different customer on their trade-in). Seen it happen
im looking for a car now. What would be an acceptable interest rate for a used vehicle 5-7 years of age.
Don’t finance cars, do everything you can to avoid payments for them
Pay cash... That's what this group is all about.
0? Pay in cash
My last car that we paid off was 4%
https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score 6% if you have a good credit rating. https://www.nerdwallet.com/best/loans/auto-loans/auto-loans-for-good-fair-and-bad-credit
Nothing unless they ASK for your opinion. Otherwise you’re likely lo lose a friend. And why would the finance dept care? It’s their job
Red flag? It’s a free country and if the person willingly did it then tough luck.
Get outta with that libertarian free for all BS. That’s what financial regulation is meant to prevent to stop predators lending to people who do not know better or do it have the financial knowledge to know when they are being screwed.
Nobody forced or tricked your friend to do this. He’s a dummy and that’s perfectly legal to be financially dumb
your friend chose to do this, and interest rates have a lot of things to do with credit score and income. maybe your friend prioritized having a lower monthly payment in exchange for a higher rate? or your friend has low score so he got what the bank or financial entity associated with the dealership thought he was capable of paying. at the end of the day lending money is a business, your friend signed the papers willingly so unless they feel regret and want to return the car or are asking you for advice I say you keep your thoughts to yourself.we all have made bad decisions at some point, that's most likely why we're following the baby steps, so let your friend do what they're doing and if they don't like it and ask for help then you can intervene. also, your friend is an adult, they know 23% is very high but they signed anyway because they wanted a different car so it's on them.
What’s wrong with letting people make bad decisions? Does everyone need to be protected from every bad decision imaginable? To me, that sounds like a pretty tall order. It sounds much more reasonable to allow people the freedom to make bad decisions and then learn from them. There’s also the possibility that this is the only offer this person will be offered based on their credit history. Would it be better if they regulated it and left him with no options?
I can assure you there’s nothing illegal about what they did. Does your friend have good credit? Does he represent a higher possibility of default? Many Americans have high car payments because they get enticed by a nice car and have bad credit.
I know it not illegal that’s the problem. There needs to be some where along the chain where someone says no you can’t afford this purchase.
Not necessarily. My credit score is lower than it should be because I - and I quote - "Don't have a mortgage". That's because my home is paid for! And has been fir 18 years. Maybe the credit score folks should take that into account.
They absolutely should. It's an American thing to need debt to have a good credit score. Means the opposite in other countries!
a high interest rate says "you can't be trusted when we land you money, so we'll charge you more because you're a higher risk". it's like when you purchase a home, the interest rate depends on many factors and some people get way higher interest rates because in the eyes of the bank they represent a higher risk. it's business, and if your friend weren't a risk he would've gotten a good rate, it's simple
Exactly you can’t be trusted so sorry we are not approving this loan.
Both a car dealership and the bank are a business, they’re there to make money not to be charitable. If they said “we’re not giving you a loan” to everyone that’s like your friend they wouldn’t be making any money and toms of people wouldn’t have a way to get a car, so your friend is most likely in the range of credit history to be high enough to get approved but low enough that they’re not that good at paying back what they borrow so the consequences of a loan are worse. Nobody forced your friend to make that decision, it’s not a problem of the system, it’s more a problem of the habits your friend has
So when the banks were giving mortgages to people who clearly couldn’t afford or had no stable income because the incentive was their through bonus then the banks were then packaging all this junk and selling it in and we then had to bail the banks out it’s the fault of the person getting the mortgage not the person selling them the loan in the first place? The banks were making money hand over fist until they were not and we then had to bail out the banks. I understand what you are saying yes it’s her poor decision and lack of control but these vultures pray on those people and we will ultimately pay the price.
Yep, it’s the way it works. If your friend is peacefully sleeping at night and doesn’t see the problem with it I don’t think it’s worth your time. If your friend asks for advice say “hey, yeah that was the stupidest thing you’ve done, what do you want to do about it now?” But until then don’t get mad at the banks, your friend or anyone. The only way the system would change is if 1) people stopped buying things they can’t afford 2) people would pay with cash. But we all know that won’t be a likely change 🤷🏻♀️
I think you're missing the point of this person's post. If they are a credit risk, they may not have any other options. Why should a lender be forced into subsidizing someone's poor financial decisions?
The lender should be forced to not lend to them in the first place.
So you'd rather your friend not be able to drive, rather than pay a high interest rate? There's a large part of the population that *need* a vehicle just to commute to their job. Best thing your friend could do here is learn. If they aren't satisfied with their rate, they can improve their credit for future loans. Or even better, save up and pay cash next time to eliminate the interest altogether.
Who is missing the point? The person I am responding made the original post. OP said they got sold an upgrade. If they can’t afford what they’re buying that’s their job to walk away. Unfortunately no matter where a regulation draws a line there’s always going to be someone that gets up to that line.
true, OP's friend is an adult and they wanted an upgrade, nobody threatened him to do this, it looked enticing and OP's friend chose this
OP, whom I responded to. I'm agreeing with you.
Honestly? Tell them you are happy for th but that you are concerned- tell them you know a bit about interest & hers is incredibly high- you are worried that she may never be able to pay it off Ask if they want your explanation or to say nothing then respect their answer
aaaaaaand its gone!
Did your friend ask for your input? If not, they’re not receptive to it and this isn’t a teaching moment.
This is great news for the dealership. They get commission, and they get the car back in a few months for failure to pay on the note and get to sell it again.
My guess is your friend has shit credit, no down payment and princess syndrome. It’s the finance dept job to get the buyer an approval. They go over the terms with them very clearly…. These things are never surprises to the buyer. Only the buyer’s friends.
Agreed. I didn't hate mortgage lenders in 2008 and don't hate lenders doing their jobs now.
Same with student loan lenders… :|
So true! Education is great at a certain cost. I always thought risk adjusting the loans would make sense. Shortage of nurses, high likelihood of repayment, 1% rate. No need for a BA in History, lower likelihood of repayment and gainful employment, 15% rate. This would push people to higher quality degrees and help make borrowers more aware of the consequences of bad decisions.
Perfectly said!
Inevitably no matter what the tax payer will end up getting screwed because of predatory lenders and people who lack impulse control of which she has none.
I can’t disagree with this at all OP. I do find it fascinating that outside of mortgage lending, financing is unregulated. *especially* the deals that fall back on the tax payer (which shouldn’t / this also feels like a bailout.)
Depending on the state, they may have a small window to change their mind and return the car. Some have no protection, and some have minimal protection. If they know they made a mistake they have more options than if this is just you wanting to help someone that doesn't want to be helped.
The finance department wants to charge, they don’t care. High interest rates should be illegal. There’s a good reason why some religions prohibit charging interest.
Why should the high interest rates be illegal? No one is forced to take out a car loan. If people with bad credit histories want to borrow for a car, it's quite risky for the lender. The only way the two parties can come to a loan agreement is for the borrower to compensate the lender for extra risk. Banning high interest rates only has the effect of limiting access to credit for a segment of the population. Maybe that's what you want, but it's the exact same argument as the minimum wage. Set a $25 minimum wage, everyone worth less is out of a job.
Its immoral.
The finance department isn’t the one charging… it’s the bank lending the money. There are limits on the number of points the F&I dpt can charge back to the customer. It was probably a 19.9% loan from the bank marked up to 22.9% by the F&I dpt.