Don’t borrow too much.
Including car loans.
Now that banks are packaging car loans like they used to do with mortgages, into big trusts that generate securities that pay interest, the car loans are getting as messed up as mortgage loans used to be.
Right, like they would not sell you a house you could not afford.
Hundreds of thousands of people who believed that ended up having to file bankruptcy.
A 5 or ten 10 or 15 thousand dollar deficiency on a repossessed car could force someone into bankruptcy.
As I always say, bankruptcy is, and should be, a last resort.
In the bad old days, mortgage brokers would make up income for borrowers to get them qualified.
The N. Y. Times is reporting that car dealers are doing the same thing:
Banks that are scrambling to buy such loans have sometimes formed alliances with unscrupulous dealers, including one who was indicted on grand larceny charges that he defrauded two dozen buyers
Usually, used car dealers are the only occupation rated below lawyers.
Anyway, that car salesman, just like the mortgage broker, gets paid at the closing of the sale.
Not his, or the car dealer’s problem, if you cannot afford the payments, and the bank ends up repossessing the car, and you end up in bankruptcy court.
Again, they do NOT care if you can afford the payments; they get a commission regardless.
DO NOT GO TO THE DEALER ALONE!
It helps to have someone there, for another point of view, to remind you NOT to buy anything the first trip.
Make out your budge before you shop, figuring how much you can really afford.
Don’t sign anything the first time through.
Find a friend with financial sense, to review everything BEFORE you sign.
Per their practice, the N. Y. Times calls for the government to protect you.
The government also must require that auto dealers, like mortgage lenders, verify that borrowers have the ability to repay their loans and meet their other expenses. In addition, regulators should bar the dealers from gaining additional profit by manipulating interest rates. Beyond this, banks that buy auto loans should be held strictly accountable for any irregularities.
You remember the great job they did protecting us from the banks? Yeah, me neither.
Keep yourself out of bankruptcy; be wary of car loans.