Are we all smart enough to avoid predatory car lending practices? Were there times when emotions trumped practicality and sensitivity? Most of us can point to a time when we bought something for or on worse terms than we should have, but this one takes the cake.
How much would this woman pay for an old 1998 Ford Escort?
While there’s nothing wrong with an old Ford Escort, the deal a woman got was terrible. I mentioned a post that first appeared on Hip Hop Vibe of a woman buying a 1998 Ford Escort. While this part of the story is ordinary, the rest is not.
For this old car, it’s locked into a payment of $289 per month for 84 months. That’s right, a car that would max out at $1,500 would cost $24,276, and you’d pay for it over the next seven years. This car is already 25 years old, which means it will be over 30 years old when you’re done paying it off.
This terrible deal is just one example of the rampant predatory auto loan rampage in almost every city.
What is predatory lending?
This lending practice imposes unfair and abusive loan terms on borrowers. He tells us that this can include:
- High interest rates
- high fees
- Terms that strip the borrower of property rights
Greedy lenders usually use aggressive sales tactics and deception to persuade consumers to enter into loans they cannot afford. This is often done by manipulating the consumer’s emotions. As far as the woman who chose the 1998 Ford Escort is concerned, she will not have any shares at the end of the loan if there were any shares in that vehicle to begin with.
Is predatory lending a crime?
While the purchase decision is entirely yours, lenders are responsible for ensuring that your loan matches your risk profile. Predatory auto loans usually go against this. There are laws to protect consumers, but most consumers do not know their rights. Because of this, many lenders continue to practice predatory lending.
How can you avoid falling victim to greedy car loans?
Information is the best ammunition against predatory lending practices. You want to be financially literate enough to understand when a deal seems too good to be true or when something just isn’t quite right.
It’s also a good idea to shop around for any loan before you sign. You may find that many car dealers offer different rates and monthly payments for similar vehicles. Shopping around allows you to compare terms and find the best deal.
Why did the woman agree to the 1998 Ford Escort?
Logic tells us that she got into a bad deal that could be predatory lending practices. However, if she had no alternative but to agree to the terms of this old car, she was in a bad negotiating position. You can come to your own conclusions as to why they bought this old car under the given conditions.
Next, check out what’s meant, or learn more about how to avoid predatory car loans in the video below:
