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Trapped Underwater: America’s Looming Used Car Crisis
"Is the car free?" wondered a Tennessee resident, who leased a used Volkswagen Passat from American Car Center.
Last week, the Memphis-based subprime auto lender yanked a $222 million bond deal and then promptly e-mailed 288 employees to inform them they no longer had a job. The company was closing its headquarters and discontinuing all operations.
According to various reporting, workers barely had time to read a company communication sent the previous day, when management said it was engaged
Is this a case of me owing the bank $100 and it being my problem, or me owing the bank $100,000,000 and it being their problem?
It’s a case of you owe me $4,000 and I’ll be there at midnight with my three adults sons, a truck and our Rottweiler to haul away your Chevy Malibu.
In the past, conditions were even worse in China. These Fintech lending companies (such as those controlled by Jack M) targeted college students with poor financial literacy for loans with compound interest rates exceeding 30%. Such a predatory system should never be permitted to exist in an improved human society.
The ACC story is not unique – in January Garber Auto out of Michigan closed down their Southeast subprime operation, which they had only started last year.
By unique I meant they apparently emailed 288 people and told them the entire business was closing down forever the very same afternoon.
I’ve gotten 8 emails in the last three weeks begging me to sell my car to my dealer and when I went there for service today there was a big sign leaning against the wall by the service department asking me to sell them my car. There were only two cars in the showroom and no one getting service. It was truly surreal.
I usually go into my garage around 11:55 PM on December 31st and watch my vehicles depreciate. Last year I was amazed to see them appreciate. Strange times it is. Much to learn, we still have.
I had a righteous, even snarky, comment to make. I’ve typed that comment a few times. Each time, I’ve deleted it. One thing that we (ok, I) can fail to appreciate is that having money makes it easier to save money.