Rebecca Vallas writes at Talk Poverty:
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This past weekend, I was part of a panel discussion on MSNBC’s Melissa Harris Perry with New York Times reporter Michael Corkery, whose reporting on the rise in subprime auto loans is as horrifying as it is important.
In what seems a reprisal of the predatory practices that led up to the subprime mortgage crisis, low-income individuals are being sold auto loans at twice the actual value of the car, with interest rates as high as 29 percent. They can end up with monthly payments of $500—more than most of the borrowers spend on food in a month, and certainly more than most can realistically afford. Many dealers appear in essence to be setting up low-income borrowers to fail.
Dealers are also making use of a new collection tool called a “starter-interrupter device” that allows them not only to track a borrower’s movements through GPS, but to shut off a car with the tap of a smartphone—which many dealers do even just one or two days after a borrower misses a payment.