"But before they can drive off the lot, many subprime borrowers like Ms. Bolender must have their car outfitted with a so-called starter interrupt device, which allows lenders to remotely disable the ignition."
Such technology enables subprime borrowers to get car loans at interest rates that are lower than they would be otherwise, because it reduces delinquency rates.
(1) that this reduces the effective delinquency rate
(2) that a reduced delinquency rate is being passed to subprime borrowers as savings in reduced interest rates.
(1) depends on whether unavoidable, but temporary, delinquency will not have knock-on effects that will exacerbate the likelihood of default, such as losing one's job because you're unable to get to work.
(2) I believe that many subprime lenders are counting on being able to repossess the car; it's part of their business model. But I might be wrong about that.
(3) in a functioning market, lower delinquency rates might translate into reduce interest rates, but it is not clear to me that it is a functional market, rather than one built explicitly on exploiting subprime borrowers with limited avenues for between lender competition for subprime borrowers.
>> that a reduced delinquency rate is being passed to subprime borrowers as savings in reduced interest rates
What are the barriers to entry for subprime auto lending? Those lenders are ubiquitous in the inner city, so I don't think there is much of a barrier to entry, maybe I'm missing something.
If there is no barrier to entry, and reduced delinquency rates aren't being used to reduce interest rates, then that is a problem poor people have that I could help solve by getting rich. In my experience, those type of problems do not exist.
For the first assertion, there are some numbers in the article, but beyond that, why would lenders pay for this if it didn't reduce delinquency rates? It would be easy to run the numbers to see if it was worth the price, even a mom and pop shop could A/B test it.
Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around. If you cannot do price comparison, then there really is no effect on prices of competition. Firms will compete in other ways, for example, by making themselves more accessible, or limiting access to competitors. Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering. And if they are doing that, its probably some shady corner dealership anyway.
>> Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around
Everybody's got a phone. And everybody can ask around, places get reputations. If you offer significantly better rates than the competition, you will get a good reputation.
>> Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering
That's not what I did when I was poor, and it isn't what the other poor people I knew did.
That's the great part about markets: If you think the terms are unfair or overestimate the default risk, you can offer car loans at the same or lower rates without such odious restrictions! (Or invest in someone who does &c.)
If no one's willing to do it, then maybe they're actually calibrating the risk correctly?
In that case, it seems like there is a social problem with a system that creates "subprime borrowers" that both need a car to survive, and can only get one under feudal conditions.
It can be a social problem, it can also be an individual problem. A lot of people want a nicer car than they can afford. I make well into 6 figures as a programmer, and drive a year 2000 Civic which cost me ~4 days of my salary. A friend of mine makes 40k/yr as a bike mechanic and drives a 2017 Civic and it cost him ~6 months of his salary. In a more rational world our car ownership would be swapped.
Isn’t there also a pretty big difference in crash safety though between the 2000 and 2017 Civic? I’d rather work a few more days for a higher chance of surviving a crash.
Somewhat, but by 2000 cars were pretty safe. At least, some were. You could look for brands that were leading the way on safety, such as Mercedes or Volvo.
Not really an individual problem, even then. Usury is one of the most legislated-on topics in history, and allowing solutions like the one described in the article is a societal choice. Your anecdote aside, most of the people borrowing on these terms are doing it out of necessity, and the ones who aren't should be told No.
I assure you, disabling one's transportation and, thus, reducing one's likelihood to arrive to work on time does not reduce delinquency. Neither are subprime lenders interested in reducing delinquency; rather, they rationalize such abhorrent practices that increase the likelihood of delinquency because it generates more revenue.
I assure you there are many liberals who won’t pay despite having money in the bank, unless they are forced to do so. It is literally a human right to them.
Sorry, how is their provoking of delinquency in any way more profitable than getting that 29% APR on an overpriced piece of junk, hitting their bank account each month?
"I assure you, disabling one's transportation and, thus, reducing one's likelihood to arrive to work on time does not reduce delinquency."
You are correct, of course, for any one particular borrower.
However, I suspect the aggregate delinquencies drop as marginal "delinquents", aware that their car is going to cease functioning, adjust their behaviors throughout the month, etc., to make absolutely sure the car payment is made.
I'm not defending the practice, I merely suggest that your (correct) observation about individual borrowers doesn't negate a net-positive result for the lender.
Yeah you better believe that if I can't pay off my car and you disable it. It'll make it an order of magnitude more difficult to now pay for the car. People don't miss payments because they have the money but choose not to pay. They miss payments because they can't afford them. Preventing job access is a quick ticket to poverty town.
That’s all the more reason these devices are effective. If the electric company, gas company, and landlord will take months to take action if you don’t pay them, but the car lender will take action on Tuesday, the car lender gets first crack at the money you do have.
It’s harsh, but I suspect that’s the actual calculated business model here.
>disabling one's transportation and, thus, reducing one's likelihood to arrive to work on time does not reduce delinquency.
The amount of people who would pay, if only they could drive to work, is less than the people who won't pay, unless they're stuck with an inoperable car. There's plenty of repossession channels on YouTube like RepoNut just showing the day to day life of a repo man. There's plenty of videos where clearly the debtor can't pay but there's quite a few where the debtor comes out the second the car is lifted and calls the bank to pay the repo fee and enough to make the account current immediately. Not to mention the videos where the car is blocked in in an attempt to keep it from being towed with something like a new looking jet ski.
One big benefit here for lenders is that in cases where the debtor can pay they're probably going to immediately pay it without having to go through the expense of hiring a repossession company and where the debtor can't pay and it needs to be repossessed, they have the location and there won't be any attempt to drive the car somewhere to hide it or park it inside a fence, etc. Also cuts down on the motivation to stifle a repossession attempt as well if it's already a brick.
I assure you, evicting someone from a home, throwing their life and family into disarray, does not reduce delinquency. Neither are home lenders interested in reducing delinquency
Therefore, all home loans should be unsecured, and anyone who demands the home as collateral is evil. /s
The biggest difference here is that there are processes for evictions and foreclosures. Evictions require notices, and foreclosures require legal processes. Lenders don't attach a device to your home when you sign the dotted line to automatically lock you out if you miss a payment.
That's not a difference your original comment depended upon. Obviously, putting someone through the foreclosure process hurts their earning power (stress and lost time), just as repoing their car does. That's not an argument against making loans secured by assets, nor against seizing them when the debt is in arrears, nor against measures that make said repossession easier.
I doubt it reduces delinquency rates that much. If you don't have the money, you don't have the money.
But I bet it makes it much more likely for the lender to be able to get the car back in the event of a default (and probably cheaper to recover). This probably does result in them extending credit to people they otherwise wouldn't.
From the article: "A leading device maker, PassTime of Littleton, Colo., says its technology has reduced late payments to roughly 7 percent from nearly 29 percent."
It's rarely the case that people don't have the money. It's that they have the money, but they'd rather spend it on other things, like food, or entertainment.
Yes - none of this is magically making the borrower have more money. The sole purpose of this device is to ensure that from an amount of money that doesn't cover their outgoings, the car payment has a higher priority and is more likely to be paid.
So you're parked in a spot that becomes a towaway zone at 7am, but you can't start your car, can't get to work. You're fired with cause, ineligable for unemployment, and your car is impounded. In this situation, the lender is more likely to get paid? I think not
In the event that you are that close to being unable to pay your debt, the lender would probably just want the car you are borrowing back so they can use it themselves and/or lend it to someone else.
Not even close, the rates are far more onerous, and often require bi-weekly payments which also doubles the chance for late/missed payments and thus increases the lot's chance of re-selling the vehicle again.
The lenders, as ever, are the only ones benefitting.
At least there are documented ways to disable these devices. A lender with a lien on a 16yo mini-van is just so wrong. Putting a snooping device and starter disabler on it are criminal.
Don’t forget that these customers don’t have a better option, because of credit, down payment, proof of income, or other factors.
Taking away someone’s best option doesn’t help them. Giving them a better option does, but I never see people who are arguing against these practices rushing out to make these loans on favorable terms.
Exactly. It seems like some people would rather have the poor not get access to cars at all. Because that's the alternative.
It's all about risk adjusted return: if the lenders can lend with lower risk, they can lower interest rates to their existing borrowers, or expand to less credit worthy borrowers and keep the interest rate the same.
If you do know someone who is broke and needs transportation you can do them a huge favor - gide them through the process and help them pick a reliable car at a fair price. Having someone along to be by their side will help keep the pretators at bay.
Yes! The current car buying process takes advantage of the consumer. This is entirely why I started working on https://yourautoadvocate.com/ a year ago.
Most everybody needs a buddy to help them with the car buying process to navigate car dealership tricks. Dealerships are well oiled machined designed to extract money and they have years of practice.
Poor people need even more help give they have no room for error.
> Are you suggesting that all a broke person needs to solve their transport situation is better advice
No. They are suggesting that one easy way you can help a broke friend out is by being there for them so they are not taken further advantage of. It in no way implies what you wrote.
This is terrible advice. If you want to give somebody a gift, give them a gift, don't enter into a contract where you share their financial obligations and give them a financial incentive to leave you on the hook.
That ain't as terrible of advice as you're making it out to be. Yes, cosigning is risky, but it also puts the other person's name on the loan, meaning they build credit as long as they're keeping up with that loan. Merely giving them a gift doesn't do that at all; after receiving the gift, the recipient is still in the exact same credit situation as before - and thus limited in choice to the same predatory practices.
That is: we for better or worse live in a society where a good credit score is effectively mandatory to achieve financial independence. Helping someone build that score is risky, but is also a far greater benefit than some one-off gift; if you can afford that risk, then it's very much worth considering.
I work for an auto loan lender. If you want a fair price, I recommend CarMax. They are fair. You won't get a great deal there, but you also won't get a bad deal there. It is right down the middle.
The shameful fact is that we have not only enthusiastically embraced - but required by force of law - that Americans cannot participate in the economy without a private vehicle maintained in good repair.
Perhaps in the 50's you could say "well there are plenty of pre-car places you can still live and work," but first we spent the 60's bulldozing those places to put in freeways and parking lots, then most of them hollowed out as the jobs moved to the suburbs, and now, strangely enough, they're revitalizing as lifestyle areas that are very expensive to live in.
This, more than anything, has cut off the bottom rungs of the economic ladder. We're not going to fix any of the major societal issues in the US until we fix our suburban development pattern. We need to quit spreading dense splatters of suburban homes butter thin between massive gaps of poorly utilized land (aka "leapfrog development" made possible only because subdivisions get to externalize their infrastructure and public service costs), stop hyper regulating development so that it takes years of professional work to get a simple building permit, and design for safe pedestrian access as a first priority, so that car ownership becomes optional rather than mandatory.
When it comes to housing and development we live in a state planned economy and it's failing us just as surely as all the others.
This is one of the main reasons I won't be moving back to the US if I if I can avoid it. Moving to a place built for humans is absolutely life changing.
Whenever people where I now live ask what America is like I explain that you can't even purchase food without first owning a car (with a few exceptions).
The underlying requirement for a city to have good public transportation is to have more dense populations, which is almost always only found in older parts of cities. All the newer parts of any city in the previous decades were zoned to be less dense, so you're not going to see comprehensive public transportation any of the cities that have experienced recent growth. It's simply untenable under a certain amount of density, not to mention that most people prefer cars if they have the option to use them.
Boston is certainly in a better position than a lot of the country. However, even in Boston, being able to be car-free is not always feasible for lower-income folks, especially as development relentlessly moves forward.
As an example: the neighborhood I've lived in for a decade used to be a relatively low-income neighborhood. Rents were low in the old buildings, most folks walked to their jobs in the medical area, and there was a cheap Shaws grocery store for food, as well as several fast food places and family-run storefronts. Public transit (light rail, buses, and commuter rail) was accessible close by.
Then a development company bought nearly all of the parcels along the main road and built a wall of mid-to-high-rises. Accordingly, all rent in the area went way up, forcing most of the lower-income folks out of even the older, shittier tenement buildings. A Target went in, and the Shaws rebranded as the more expensive Star Market (and will soon close so they can build a new Whole-Foods-type expensive megastore). All of the small storefronts closed, and now the area is nearly entirely high-end shopping outlets and expensive gastro-restaurants. They shut down the bus lines running through the neighborhood because all the rich people who moved in have cars (Porsches and Lambos now rev through the neighborhood at all hours) and bus ridership was down.
Where did all of the folks -- and their families -- previously able to afford the area go? To areas of Boston where the rent is still cheap. Many of these places are nowhere near good public transit (e.g. if someone moved from this area of Boston to Dorchester, then took transit to their same job, it would require 3-4 transfers on packed buses and trains). So now these people are forced to get a car as well.
The worst part of all of this is: who wins here? Not the people forced to leave their neighborhood, not the people who suddenly need to buy a car, not the people who can no longer afford to run a restaurant in the area... not even the rich people living in the expensive high-rises (or not living in -- many are vacant "investments" from overseas). The developers win. They pumped as much money as they could out of the neighborhood, and then moved on to their next target, leaving a less livable city in their wake.
I'd just add that Boston also just doesn't have a car-free culture like Manhattan in particular has.
So even if you're a middle-class/upper-middle-class tech worker who wants to live in the city:
1.) Many of the tech jobs are in the suburbs and you mostly need a car to get to them. (There are today more jobs in the city again but many aren't.)
2.) Many of your friends probably live in transit unfriendly suburbs so you'll probably find it hard to get together with them unless they come in to meet you.
Of course, people adapt to what is easier for them and just behave accordingly.
This is a reversal of cause and effect. I'm guessing since you are on Hacker News, it's quite likely that you are a high-paid engineer. You, and many others like you, are the cause of your neighborhood getting more expensive. As suburbs have become less desirable in our culture, many people would like to live in walkable parts of the city, so prices get bid up. The new mid rises kept prices lower than they would have been otherwise. If they hadn't been built, then all the rich people would have moved into lightly renovated tenements, exposed brick and such. Perhaps your apartment is something along those lines. Trust me, I'm from San Francisco, a city that "beat the developers" in the 70's, and made laws against building anything new in most of the city. Now poorly maintained 100 year old houses in any neighborhood go for $2-3mm.
It's a factor of whether the city was built before the industrial revolution. Humans will always default to the easy path.
I think it's the exact same paradigm for software bloat. By having higher powered computers, we build websites without needing to optimize, so now you need a high powered computer to run them.
Building a city without cars is like developing a video game 30 years ago, much more deliberate use of limited resources.
Most of modern Japan's neighbourhoods were built after the war. Tokyo grew from some 4 million people left in the ruins to 12 million in 1980. Tokyo especially, but really the whole country, is even more walking and transit friendly than many of the commonly mentioned places in Western Europe.
I think part of it was just a cultural preference, perhaps due to the communal nature of Japanese society. Another part of it was to avoid having to import oil, and to not waste wealth on cars. Gas, and vehicles, were taxed heavily, and still are.
IIRC a big part is parking policy. Notable differences
- the US allows overnight street parking in many places. In Japan overnight street parking is banned.
- the US mandates a minimum level of parking in pretty much all construction that in practice is very excessive; most developers build the minimum and nothing more, because they don't feel they need the parking (and often the lots are rarely full). Japan has some parking minimums but they are small. And there is no pressure to increase parking minimums to lessen demand for street parking, because overnight street parking is banned.
- when buying a vehicle, Japan requires "proof-of-parking" in a space that is either owned or leased by the buyer. No such mandate exists in the US, so you can buy a car without having provided a place to park it.
The above and other policies basically combine so that Japan has free-market parking with specific properties and buildings provided by the market as demand warrants. Whereas the US builds seas of parking without evidence of demand, so every property is surrounded with a sea of parking that pushes properties further from each other and causes driving to increase in a vicious cycle.
> Most of modern Japan's neighbourhoods were built after the war
good point. seems a little different in the US since lots of towns were settled after the industrial rev. Japan being an island I would imagine most land was already accounted for.
It might be that instead of constrained by travel, they are constrained by real estate value.
There are a few places where you don't need a car. I didn't have a car in NYC and now I still don't in Chicago. Of course if you can't afford a car you probably can't afford to move.
Ironically places where you have happily live without a car tend to be more expensive to live in. It's not just the moving costs; if you can't afford a car you probably also can't afford the rent in a place where you don't need a car.
Probably that has a lot to do with the fact (or my opinion) that places where you can live car-free are also much nicer places to live, thus more sought after.
Although I base that mostly on myself I’m sure there is some research into it.
Sometimes people are like, 'Why'd you move back to New York?' And I was like, 'I don't know, I just really love the ambience and there's such a charm to the city, you know?
As usual, an over–generalization. Some places are like that, others are not. I myself live in a place that has both good access to the interstate for visits to neighboring towns, and is extremely walkable. There are two grocery stores within half a mile, more than a dozen restaurants, lots of other types of stores, office buildings, etc. It’s not perfect though; it could do with more apartment buildings in amongst the restaurants in my opinion.
Still, I generally agree that the permitting process in many places is ridiculous, especially in big cities. But many people do want to live in a house with a yard; it’s not like the government is forcing people to do so.
The government is literally forcing them in the case of virtually all new residential development. In most places it is illegal to have lots under 5000 square feet or more than one family on a lot (no duplexes etc). In many places the lot size restrictions are even more extreme, requiring 10-20k sqft per lot.
Almost every inch of the US and Canada has a litany of rules saying that buildings have to be 20’ or more set back from the street and have to leave 5-10’ on each side clear on the sides and rear. Usually they are limited to two stories and in some cases only one.
A lot of places take this further with rules on how much of your house has to be brick, or what color the roof can be etc. And since that’s still not enough to please some people’s desire for perfect conformity, most modern homes layer on top of this special HOA rules, for example restricting what kind of window shades are acceptable and how tall and green your grass most be. These rules are enforced by the local municipality and backed by the force of the police.
I have no doubt that there are many people who like single family housing and would buy designs like the common cookie cutter standard if it was part of a truly free market menu, but how much genuine demand exists we will never know, because virtually nothing else is legal and it hasn’t been for two generations now! People generally don’t “want” things they’ve never experienced and have no access to.
Just to drive this point home, imagine we passed a law saying that people were only allowed to eat seafood of certain dimensions and without tentacles. Fish, shrimp, and lobster between 1-7 lbs are OK. No squid or octopus. You can cook them however you want, except no grilled salmon is allowed in Vermont. Any other food requires years of community hearings to acquire one-off conditional approvals on a meal by meal basis.
Would you find plenty of people who liked seafood and defended this system? Yes. Would you know anything about people’s true preferences if they were allowed to be omnivores? No.
That’s what our world has been reduced to, and it’s the product of an almost unfathomably deep and Byzantine regulatory complex by which the government micromanages the built environment around us.
I agree that there are problems, but there’s still plenty of room to start new towns with better rules. Although certainly it varies, I believe that the process is to get enough people to move to an area and then agree to form a town together. And the rules in existing areas can be changed too, if you prefer. Just get a group of like–minded people to all move to the same area.
Also, I suspect that there are more towns out there that are dense and walkable than you realize, and more HOAs that are useful and reasonable (and that therefore never make the news) than there are terrible ones. The one my parents are in seems to have been run entirely without drama for decades; it just cleans the community pool and mows the median of the central avenue and replaces the sign at the front of the neighborhood every so often. A few years back a contractor replacing a culvert caused a flood and damaged a street and some houses; I’m not sure if the HOA hired them or the city did. Either way, the road was repaired and the pond refilled, and this is the most dramatic thing that’s ever happened in the area.
He is being a little hyperbolic there. If you are a member of an HOA, and the HOA votes in a rule governing the height of your grass, then the HOA can enforce the rule with fines. If you don’t pay the fines, the HOA can put a lien on your house. It would be quite odd for the police to be involved at any point.
A lien just means that the house cannot be sold without paying the lien holder. Liens are actually quite common; any house bought with a mortgage also has a lien put on it for the balance of the loan. This forces you to pay off the loan if you sell the house.
If the house is put up for auction due to a foreclosure, I think a lien holder could recover their money from the sale price, or even gain ownership of the property. At that point the police might be involved in order to evict the former owner. But the HOA’s lien cannot cause a foreclosure, I think. That requires either defaulting on your mortgage, or a tax lien put on it by a municipality, state, etc.
Honestly, a town or city could make ridiculous rules about the length of your grass as well, and you would have just as much trouble or more. There are certainly enough horror stories told about HOAs to make a person wary of them. If all they do is manage property owned in common by the residents, then they’re usually fine. When properly run they are the most boring type of government ever invented. All they have to do is clean the pool regularly, mow the grass from time to time, or save up enough to buy a new roof for the building every couple of decades.
Meanwhile the city you live in probably sold hundreds of millions of dollars in bonds to buy a new football stadium, which earns hundreds of millions in yearly revenue. Naturally, they gave the owner of the stadium all that money and a tax break to boot, just to attract them to the area. Sales taxes went up a bit because of the increased tourism, but not enough to cover the bond payments, so your property taxes probably went up too. The mayor’s cousin’s construction company made a pretty penny building parts of the stadium, and his wife earned a bundle as a motivational speaker giving talks at conventions funded by the company that sells the concessions. Which is worse?
Certainly you always need to keep on top of what your HOA is doing, but you can’t ignore what your town is doing either.
I used to live in Scottsdale, AZ. They can fine you up to $3,000 a day if your yard isn't up to code. They say debris could be hidden in the yard and someone could get hurt. I don't know if the police would get involved though.
It's worth noting that this extends beyond the current housing market, too. Two common examples I often bring up:
1. We don't know whether or not consumers actually like having touchscreens in their cars as the primary means of control, because the "free" market lacks any other choice.
2. We don't know whether or not consumers actually like having TVs with built-in "smarts" (as opposed to, say, a box or stick that one can upgrade/replace at any time without having to replace the entire TV), because the "free" market lacks any other choice.
In order for a free market to exist, it has to be, you know, actually free. That means having some actual choices, and without coercive pressure toward a particular choice.
What makes the housing market even worse, however, is that said lack of choice is almost always through government fiat - making it even more impossible for a competitor to offer choices different from the ones currently in vogue.
At some point, we the people need to stand up for ourselves and tell NIMBYs and such to go pound sand instead of actively making our lives as difficult as possible simply because they can.
I’m not an expert on cars, but isn’t there only one brand known for having all the controls on a giant touchscreen? The other brands all have buttons and dials and things, with haptic feedback of some kind. Maybe some have smaller screens, for a navigation system that you can pay extra for? But then smart phones have become so popular, that maybe that’s not so important any more.
I don’t own a television myself, but surely there must be _some_ dumb tvs still available. If not, then just buy a computer monitor instead.
I think that these two examples are probably overreaching.
However, I agree that zoning and building codes can be overly restrictive. If you want to get away from them, move out of the city. The county rules are often less restrictive.
> I’m not an expert on cars, but isn’t there only one brand known for having all the controls on a giant touchscreen?
They seem to be ubiquitous among all but the most budget of models. There might have some buttons, sure, but the vast majority of interaction is through a touchscreen. And this predates the brand you're likely thinking off, too. When I rent a car, regardless of make or model, there's a touchscreen (with a handful of exceptions, and those exceptions are pretty far on the low end of rentals).
And usually it ain't even a good touchscreen; the overwhelmingly vast majority of them over the last decade have been clumsy imprecise resistive ones - which is probably "reasonable" for those wearing gloves, but that problem would be avoided entirely by, you know, not pushing for touchscreens as the primary means of input.
> Maybe some have smaller screens, for a navigation system that you can pay extra for?
The screens themselves are becoming increasingly standard, even without the navigation system. None of the cars I've rented in the last 5 years have had a navigation system, yet the vast majority of them had touchscreens, and those touchscreens were mandatory for anything beyond the most trivial of operations.
> I don’t own a television myself, but surely there must be _some_ dumb tvs still available.
If you want 4K, Sceptre is literally the only option of which I'm aware. That is, accordingly, the only brand of TV I've bought in the last 5 years.
> If not, then just buy a computer monitor instead.
Monitors of sizes suitable for watching something in a living room from a couch are vastly more expensive than even the highest-end "smart" TVs. And that's assuming you can even buy them; such monitors are intended for things like digital signage, meaning that businesses - not consumers - are the intended customer.
I’ll have to defer to your superior knowledge of cars, I guess. I’ve only seen one car in the last few years with a touchscreen. And I’ve been in cars dozens of times over that period. Perhaps they just haven’t been new enough models.
> Monitors of sizes suitable for watching something in a living room from a couch are vastly more expensive than even the highest-end "smart" TVs. And that's assuming you can even buy them; such monitors are intended for things like digital signage, meaning that businesses - not consumers - are the intended customer.
Funny how the size of monitor that is considered “suitable for a living room” has changed over the years.
I think what you’re saying is that we don’t have a free market because the products advertised to consumers are more narrowly tailored than they appear. I disagree. I think that consumers have more information available to them than ever before at any point in history. If they have strong preferences, then there is nothing stopping them from getting exactly what they want. If they just want a nice looking flat–panel TV, and don’t want to spend a lot of time researching TVs, then they don’t have to bother. We should not even want them to have to bother, in that case, because that wouldn’t satisfy their values.
The old adage “The Customer is Always Right” applies here, in its original meaning. Whatever product sells the best is by definition the one that is most fit for the market, and we can't complain that it’s ugly, or not as well–built as it ought to be, or that it’s not fit for our particular purposes. If it sold well, then it wasn’t ugly to the people who purchased it, it was built well enough for the people who purchased it, and it fit their purposes well enough that they spent their hard–earned cash on it. It’s no good looking down our noses at them; they just don’t have the same tastes or preferences at us.
Maybe there’s a hypothetical product that could have sold better than whatever is selling the best right now, but there are often good reasons why those aren’t available yet. iPhones, for example, sell well primarily because they are trendy and hip. There are plenty of Android phones that are just as good, or even better, but they don’t satisfy people’s need to be trendy and hip. Maybe once iPhones lose their cachet, then the Android phones with the best features and technology will sell better. Or maybe by then Symbian will turn the market on its ear and become the big new thing. Or maybe brain implants that give us telepathy will make phones obsolete.
I think the market _is_ free, in spite of trendy things like iPhones and smart TVs. Certainly in some areas, like architecture, the government puts its thumb on the scales pretty heavily and distorts the market. Houses and apartments can’t be too small, because that wouldn’t be good for the people living in them, and other paternalistic rules of that type do distort the market. They do make it less free, by artificially limiting the available choices ahead of time.
The lender's risk is significantly reduced by having constant GPS access and the ability to disable the vehicle. I'm sure they've reduced the super high interest rates they were charging these borrowers with subprime credit scores, correct? Nope. Same high interest rates.
I'm curious about the economics of that market segment.
How often can the seller repossess a car successfully (I assume these devices makes it way easier to do so). And how often is the vehicle in a good enough condition that it can be resold? Repossession has a cost, but how many months are required to be able to repossess and turn a profit by then reselling the car?
> And how often is the vehicle in a good enough condition that it can be resold?
Kind of an implicit assumption in that question that just because the owner is missing payments and has bad credit they're dirty or the car is beat to hell. Any ways there's markets for cars in every shape between pristine and just on the usable side of totaled.
> how many months are required to be able to repossess and turn a profit by then reselling the car?
They can sell it to an intermediary or send it to auction pretty quickly.
>They can sell it to an intermediary or send it to auction pretty quickly.
In many cases, the court requires it goes to auction to demonstrate it was sold "at market value". Lenders don't really like to repossess cars - we are in the business of putting people IN to cars, not taking them OUT.
They don't rely on reposession to make a profit. That threat is just a stick to keep the loan payments coming in. They make their profit by selling the car for a hefty markup in the first place, and with usurious interest rates.
So they take a $1,000 car from auction, sell it for $3,500 or $4,000 at 18% interest, with a loan structured so that all the principal is paid at the end, it doesn't take long for them to be in the black even if they have to repo it.
Actually, from what I understand, the Buy-Here-Pay-Here car dealership model frequently revolves around the assumption the car will be reposessed and resold several times.
It's worse. They typically charge the vehicle price as the down payment, so anything else paid is profit. Every time they repo a car they get this money paid to them again. On top of that, they will lie about the 'buy here pay here' and will sell of your auto loan to a loan shark company, who will then try to add more fees/interest/anti-consumer clauses after the fact.
I dealt with this myself once, and will never do so again. Also, they tried to penalize me for paying early to get out from under them, and refused to send my title until I threatened to sue with all my voice recordings of every phone call. They tried to say I could only pay advance payments, not pay down my principal, and tried to extend my contract length two years after purchasing my loan without my consent or knowledge, despite having a written contract forbidding the car lot from selling my loan.
> They typically charge the vehicle price as the down payment, so anything else paid is profit.
Wait. If the borrower could afford that down payment, and that's what the car cost originally, then why couldn't they have just bought a similar car outright from a similar seller? Is this purely a matter of ignorance being exploited?
You might be able to find a similar car at the same price in a private-party deal, but it would entail skimming newspapers/websites and then finding transportation to each seller's home to see one vehicle. In contrast, you can probably get a bus to a scummy dealership located on a main commercial street and see dozens of lemons at once.
I also suspect there's a perception of legitimacy from a dealer-- that a private-sale vehicle could be faulty, but one being sold commercially can be assumed roadworthy.
Most regular consumers don't have access to those kind of car auctions - they're for dealerships. I also think they get bought in batches then shipping is paid for in one sum. It's not accessible to end customers.
These auctions are where your car gets sold after you trade it in to a dealership or sell to Carfax, so a Nissan dealership doesn't have to worry about trying to sell a 2013 Chevy Malibu themselves. And the trade in value you get is usually low enough that they aren't in danger of not making a profit. Then they get purchased by various entities, sometimes Carvana, sometimes normal brick and mortar dealerships that specialize in selling used cars and also poverty industry buy here pay here lots.
For what it's worth, I purchased a car in cash from one of those buy here pay here lots once. I had sold a car and needed something cheap to get around in for a while. It was a really bad experience all around - the car they sold me was a total lemon, even though the Carfax was pretty clean and the model had a reputation for being reliable. They misrepresented stuff (A/C had a serious leak)
They also tried to get out of even the most basic obligations they had (Paying $20 to get the emissions checked - where I live the car has to pass that test and dealer has to pay for it.)
If you need a cheap ride, I'd 100% go with buying from a private seller over going to one of those places.
I'm glad to have an experience like that - it really makes you realize how bad things are when you don't have any power in a situation. And why it's so important to have the government step in and say "no, you can't do that." Which our country doesn't have nearly enough of.
Happens every day. In my case, I didn't know better. Story time.
I was a young 20 year old with a brand new baby and a decent job. My prior car was a beater and constantly broke down. I went to a 'dealership' thinking I'd get a better car, and hey, it's 'buy here pay here'!
I was looking at a really good condition crown victoria. It was a family sedan, had one prior owner (a winter texan), who had kept all the paperwork for every oil change and service done.
The down payment? 4500. The bi-weekly payments? 250. So, 4500 down, 500/mo for I believe 6 years. The kelly blue book value of the crown vic? 4500 in mint condition. So not only had I paid them the full value of the car, as a down payment, but they were getting me for ~6 years of payments, so had I paid the minimum and let the loan ride the full 6 years, I would have ended up paying ~$36k US for a $4500 car.
When I met someone who knew cars and prices, he informed me how badly I was being ripped off and to pay off the principal asap to get out from under the loan. Of course this was made complicated when they sold my loan.
If the company I bought the car from was bad, the company they sold my note to was the Devil himself. Constantly threatening repossession, beyond rude, calling friends and family ('just references not co-signer, it would be illegal to contact them abiut financial matters!'-more bullshit.
So, it's a combination of desperation, ignorance, and youth I guess, and neither my ex-wife nor I having people to turn to for advice back then.
As an aside there were no smart phones yet, so it wasn't as though I could search this stuff while on-site.
I just couldn't have imagined as a young man that someone could be so incredibly unscrupulous.
All of the above is especially true during tax season when they make 99‰ of their money.
Edit to add- want some weekend fun? Grab the KBB app (wrapper sucks actual website is better), head to the poor side of town to buy here pay here's, and check the vehicle's down payments against the KBB max value =)
BHPH model is NOT the same as getting a subprime loan from a bank or credit union. Very few cars are sold via BHPH.
Also, many states require that repossessed cars are sold at auction, and the proceeds go towards the balance owed (aka the poor person who borrowed the money).
Usery laws are complex, and it is difficult to know why the lady in this article got a loan for 20%. That is unfair and I feel bad for her.
because she is stupid. she probably doesn’t even know what a competitive interest rate is. there’s no magic or system against her, they just offered her an absurd number and she said yes. many such cases.
That’s state-by-state. In some states you can. In states where you can’t, there are many people with the broker/dealer creds who will give you access for a percentage or flat-fee (typically $300-500) markup.
> In Austin, Tex., a large subprime lender used a device to track down and repossess the car of a woman who had fled to a shelter to escape her abusive husband [ ... ] The move to the shelter violated a clause in her auto loan contract that restricted her from driving outside a four-county radius, and that prompted the lender to send a tow truck to take back the vehicle. If the lender could so easily locate the client, Ms. Kleinpeter said, what was stopping her husband?
I can't stop re-reading "a clause in her auto loan contract that restricted her from driving outside a four-county radius". Is that a normal thing in auto loans? Restricting free movement? How is that even legal?
The options were for this lender to not lend this person a car, or lend this person a car with certain conditions reducing the lender's risk to acceptable levels. Car sales aren't a monopolized business, and there's plenty of competition, so I also don't see any evidence of collusion on the side of the sellers.
Hi! I work for a large auto loan lender. I have NEVER heard of a practice limiting where you can drive your car. I would imagine it would be bad for business (e.g., here's a car, you can't use it that much, have fun!).
Personally, I would protest VERY loud if I found my company was doing this.
Also, I'm mostly certain we do have trackers on many of our cars, and I would imagine the data is transmitted securely so husbands can't use that signal.
> ... I would imagine the data is transmitted securely so husbands can't use that signal.
It won't matter if the data is transmitted (and stored) securely, a husband concerned about his wife will have enough data about the auto contract to use some social engineering and get the car's location from the lender.
hi! you don’t work for a ghetto auto lender. they require very little money down and they charge insane interest rates. and don’t care about your credit. that’s why the cars are such a flight risk.
My guess would be that it limits where you can live (park car overnight) but not where you can drive. For example car insurance price is different for different cities - the same could be the case for subprime loan.
I had the same thing, with a rent to own furniture place, 27 years ago.
I moved from one side of the country to the other, to open a new corporate office, but the move was hasty. 2 weeks from decision to hitting the road.
I just packed up everything, not thinking about the TV I rented-to-own. When it came time to pay, I had also switched banks, so I called them.
After I explained that I moved, and wanted to setup a new debit-from-account, the woman on the other end lambasted me, on and on, explaining breach of contract, that I stole the TV, I'm a thief, this sort of thing. Obviously my mistake for not reading the contract, and they were local only, so they had the same sort of geo-only clause, but at the same time I called them! No late payments, completely current, yet they unloaded on me like I was 6 months late and had planned some sort of elaborate theft.
Fed up with the abuse, I asked her to just get over it, and tell me where to send new payments. Nope, I was apparently a thief, an ass, a liar, on and on again.
I cut that short, asked again how to send payment, or do they not want anything? Again the yelling. I shouted goodbye and hung up.
I had given her my new address and phone number yet never heard from them again.
With these sorts in this industry, I am not surprised they just towed.
> The move to the shelter violated a clause in her auto loan contract that restricted her from driving outside a four-county radius, and that prompted the lender to send a tow truck to take back the vehicle.
The lender should have spoken to her and adjusted the allowed region rather than escalating immediately to a towtruck. Ideally she would have had the presence of mind to call her lender, but some understanding should be shown.
> If the lender could so easily locate the client, Ms. Kleinpeter said, what was stopping her husband?
This makes no sense. Her husband doesn't work for the auto lender. Why would he have access to that? It feels dishonest/manipulative to use this argument.
I can easily see a scenario where an abusive husband leans on some guy/gal working in a car dealership to get information. In theory the information shouldn’t flow across that border but in practice it does.
The woman escaped an abusive relationship and found safety in a shelter. It isn't a question of "presence of mind", calling your auto loan agent would be the absolute last priority for everyone in her shoes.
> This makes no sense. Her husband doesn't work for the auto lender. Why would he have access to that? It feels dishonest/manipulative to use this argument.
"Hey, my car went walkabout and if I report this to the police it's going to take forever and cost a lot of time and money for all of us. I need to find it and you folks have a tracking system on it. Where is it? Thanks."
I suspect that would probably work in 90% of the cases. These aren't exactly the most reputable people. A little bit of cash might get another 5% of the cases.
Since he is the husband, his name is likely on everything as well, so he has a legal right to find the car.
What's worse: a lot of abusers make sure to put only their own name on things so that what the wife did is nominally illegal. A little bit of nominally legal manipulation and you might actually be able to get the actual police to do all the legwork for you.
Ms Kleinpeter is the woman's lawyer, and she had a chance to use public opinion to help pressure the auto loan company. She happened to do it using language that didn't expose her to slander. Just doing her job as far as I can tell. Pretty well, too, since the quote landed in the NYT.
Buy here pay here auto lots are essentially predatory lenders using the cars as tokens. It's all about the loan not the car. They thrive on selling the same car over and over and will repossess at the drop of a hat. Two days late on your payment? Expect that car to be towed any minute. Even if the desperate customer manages to pay off the loan the lot makes credit card type interest on the transaction.
But the kind of "buy here pay here" places that use these devices are sellers of last resort. Basically the vehicle lending equivalent of a payday lender.
It sounds like that contract was in place to prevent someone from deciding to move somewhere out of the Austin area without telling the lender where they moved to.
For moving to a different country that's basically the status quo. At the very least, you need the lienholder's authorization if you want to get the vehicle out of the country, customs will not let you export it if you don't have a clean title or authorization from whatever lienholder.
It's not totally unusual for a contract to stipulate residency. It's fairly common to do that for a lease agreement. The lender is on the hook for the outstanding balance on the loan if they can't get the debtor to pay up. That collateral just up and disappearing substantially changes the risk associated with the loan. I don't see why it should be illegal to write up an agreement along the lines of "I'll loan you the money for this car, but you have to park it in the surrounding area until it's paid off". No one is claiming that the agreement required the debtor to live in that 4 county radius, just that until they owned the vehicle outright that the vehicle had to be kept there.
As for the argument about how it's endangering the woman from the article, is the car hers or not? If it's in her name then this is just idle speculation that the lender would disclose that information to the abusive husband. If it's not in her name then there's nothing stopping the abuser from just contacting the lender and telling them to pound sand the car is gone. It's not like it's hard to get them to put the car up for repossession and have them pick up the car and disclose the location the next time she goes to WalMart. Even without the GPS tracker it's already commonplace for lenders to contract out repossessions to third parties who trawl parking lots and subdivisions with ALPR cameras looking for cars up for repossession.
It’s a contract. You agree to the terms or you borrow the money from somewhere else.
The thing this article casually omits throughout, aside from the opening, is that these are sub-prime borrowers. They have a history of poor credit. They probably are not putting much money down. They have a history of being late on payments. In order to get the lending terms THEY find favorable, they agreed to install an interrupt device.
I just purchased a car without one and got a great rate because I spent years... YEARS! Fixing and improving my credit history.
These people want the same terms without the work or change in behavior.
America has a long and honored tradition of mechanisms preventing some clauses in contracts to be legal. IANAL, but maybe a next patch to laws could be to forbid such behavior (on the side of lenders) as predatory. Or maybe more sane approaches are possible.
It's even more important when some clauses can be enforced mechanically, without going through the legal system. This underscores the importance of having the ability to negate mechanical means to enforce contract clauses - at least in some cases :) like this. With rise of IoT, the problem seems to be getting more urgent.
"You can buy this TV on credit, but you're only allowed to watch the news on it".
"I'll loan you money to buy an oven, but you're only allowed to roast chicken in it".
For any other product it seems ridiculous, and rightly so.
The car obviously has some kind of tracking device in it for them to be able to tell where it is, and that it has even violated this clause, so they can't be afraid that she'll drive off into the sunset, never to be heard from again.
Aside from the Kafka factor, it also limits her to job opportunities found only in those counties, which would make it harder for her to improve her situation than if she had free movement.
> These people want the same terms without the work or change in behavior.
Nobody's arguing that a subprime borrower should receive the same interest rate as someone with a good credit history, but limiting the use of the vehicle is an entirely different scenario, and one I'm struggling to think of any justification for.
If you find the black box, and identify the make/model (like "Passtime Trax-4V GPS") there's a ton of YouTube videos on how to bypass the ignition lockout while leaving the box itself untouched. It's typically just making a jumper wire for a cheap relay that's outside of the black box.
We're sadly moving towards everything being leased, rented, or "as a service". The ideal future for corporate take over is where they own the fundamentals of your "free" life, and they can shut you down at any time.
I think we should all try to never contract any loan, whatever your profession, income, age,...
You just do without until you can really afford it, you try to cut down your expenses as much as possible. For example you avoid having children too early
Loans encourage over-consumerism
The only exception is maybe student loans, I don't know much about this because I've studied in France where education is almost all free till the end (engineering degrees)
Even for a house/apartment, I saved up for about 15 years and then I could buy one
True but i think the only one entity who is legally able to give private, non-business, non-mortage loans should be the state, a fair, justified loan with peoples who can help you (make the calc, give you alternatives etc), without the interest to suck you dry, but help you on the way so you can pay your/more taxes in the future.
> You just do without until you can really afford it
That's much easier said than done in a society where reliable personal transportation is frequently a condition of being able to afford anything. Kinda hard to earn money if you can't get to work.
Ideally, there'd be some sort of socioeconomic safety net - like, say, a universal basic income - to provide an alternative means to bootstrap one's life and escape poverty. Unfortunately, my country seems to be dragging its feet.
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[ 3.3 ms ] story [ 181 ms ] threadSuch technology enables subprime borrowers to get car loans at interest rates that are lower than they would be otherwise, because it reduces delinquency rates.
(1) that this reduces the effective delinquency rate (2) that a reduced delinquency rate is being passed to subprime borrowers as savings in reduced interest rates.
(1) depends on whether unavoidable, but temporary, delinquency will not have knock-on effects that will exacerbate the likelihood of default, such as losing one's job because you're unable to get to work. (2) I believe that many subprime lenders are counting on being able to repossess the car; it's part of their business model. But I might be wrong about that. (3) in a functioning market, lower delinquency rates might translate into reduce interest rates, but it is not clear to me that it is a functional market, rather than one built explicitly on exploiting subprime borrowers with limited avenues for between lender competition for subprime borrowers.
What are the barriers to entry for subprime auto lending? Those lenders are ubiquitous in the inner city, so I don't think there is much of a barrier to entry, maybe I'm missing something.
If there is no barrier to entry, and reduced delinquency rates aren't being used to reduce interest rates, then that is a problem poor people have that I could help solve by getting rich. In my experience, those type of problems do not exist.
For the first assertion, there are some numbers in the article, but beyond that, why would lenders pay for this if it didn't reduce delinquency rates? It would be easy to run the numbers to see if it was worth the price, even a mom and pop shop could A/B test it.
Everybody's got a phone. And everybody can ask around, places get reputations. If you offer significantly better rates than the competition, you will get a good reputation.
>> Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering
That's not what I did when I was poor, and it isn't what the other poor people I knew did.
If no one's willing to do it, then maybe they're actually calibrating the risk correctly?
You are correct, of course, for any one particular borrower.
However, I suspect the aggregate delinquencies drop as marginal "delinquents", aware that their car is going to cease functioning, adjust their behaviors throughout the month, etc., to make absolutely sure the car payment is made.
I'm not defending the practice, I merely suggest that your (correct) observation about individual borrowers doesn't negate a net-positive result for the lender.
It’s harsh, but I suspect that’s the actual calculated business model here.
The amount of people who would pay, if only they could drive to work, is less than the people who won't pay, unless they're stuck with an inoperable car. There's plenty of repossession channels on YouTube like RepoNut just showing the day to day life of a repo man. There's plenty of videos where clearly the debtor can't pay but there's quite a few where the debtor comes out the second the car is lifted and calls the bank to pay the repo fee and enough to make the account current immediately. Not to mention the videos where the car is blocked in in an attempt to keep it from being towed with something like a new looking jet ski.
One big benefit here for lenders is that in cases where the debtor can pay they're probably going to immediately pay it without having to go through the expense of hiring a repossession company and where the debtor can't pay and it needs to be repossessed, they have the location and there won't be any attempt to drive the car somewhere to hide it or park it inside a fence, etc. Also cuts down on the motivation to stifle a repossession attempt as well if it's already a brick.
Therefore, all home loans should be unsecured, and anyone who demands the home as collateral is evil. /s
But I bet it makes it much more likely for the lender to be able to get the car back in the event of a default (and probably cheaper to recover). This probably does result in them extending credit to people they otherwise wouldn't.
It's rarely the case that people don't have the money. It's that they have the money, but they'd rather spend it on other things, like food, or entertainment.
The lenders, as ever, are the only ones benefitting.
Taking away someone’s best option doesn’t help them. Giving them a better option does, but I never see people who are arguing against these practices rushing out to make these loans on favorable terms.
It's all about risk adjusted return: if the lenders can lend with lower risk, they can lower interest rates to their existing borrowers, or expand to less credit worthy borrowers and keep the interest rate the same.
They are broke - affording it is the hard part. If you really want to help co-sign on financing, lend them a vehicle, offer to car-pool etc
Poor people need even more help give they have no room for error.
You can help somebody by explaining they will be happier with a used car rather than a new one.
Is that patronizing? Maybe. But if everybody keeps to their own business we are just perpetuating the problem.
Co-signing is a good way to loose friends.
No. They are suggesting that one easy way you can help a broke friend out is by being there for them so they are not taken further advantage of. It in no way implies what you wrote.
This is terrible advice. If you want to give somebody a gift, give them a gift, don't enter into a contract where you share their financial obligations and give them a financial incentive to leave you on the hook.
That is: we for better or worse live in a society where a good credit score is effectively mandatory to achieve financial independence. Helping someone build that score is risky, but is also a far greater benefit than some one-off gift; if you can afford that risk, then it's very much worth considering.
I work for an auto loan lender. If you want a fair price, I recommend CarMax. They are fair. You won't get a great deal there, but you also won't get a bad deal there. It is right down the middle.
Perhaps in the 50's you could say "well there are plenty of pre-car places you can still live and work," but first we spent the 60's bulldozing those places to put in freeways and parking lots, then most of them hollowed out as the jobs moved to the suburbs, and now, strangely enough, they're revitalizing as lifestyle areas that are very expensive to live in.
This, more than anything, has cut off the bottom rungs of the economic ladder. We're not going to fix any of the major societal issues in the US until we fix our suburban development pattern. We need to quit spreading dense splatters of suburban homes butter thin between massive gaps of poorly utilized land (aka "leapfrog development" made possible only because subdivisions get to externalize their infrastructure and public service costs), stop hyper regulating development so that it takes years of professional work to get a simple building permit, and design for safe pedestrian access as a first priority, so that car ownership becomes optional rather than mandatory.
When it comes to housing and development we live in a state planned economy and it's failing us just as surely as all the others.
Whenever people where I now live ask what America is like I explain that you can't even purchase food without first owning a car (with a few exceptions).
Especially now with everyone using post pandemic delivery, it will get even easier to not have to own a vehicle.
As an example: the neighborhood I've lived in for a decade used to be a relatively low-income neighborhood. Rents were low in the old buildings, most folks walked to their jobs in the medical area, and there was a cheap Shaws grocery store for food, as well as several fast food places and family-run storefronts. Public transit (light rail, buses, and commuter rail) was accessible close by.
Then a development company bought nearly all of the parcels along the main road and built a wall of mid-to-high-rises. Accordingly, all rent in the area went way up, forcing most of the lower-income folks out of even the older, shittier tenement buildings. A Target went in, and the Shaws rebranded as the more expensive Star Market (and will soon close so they can build a new Whole-Foods-type expensive megastore). All of the small storefronts closed, and now the area is nearly entirely high-end shopping outlets and expensive gastro-restaurants. They shut down the bus lines running through the neighborhood because all the rich people who moved in have cars (Porsches and Lambos now rev through the neighborhood at all hours) and bus ridership was down.
Where did all of the folks -- and their families -- previously able to afford the area go? To areas of Boston where the rent is still cheap. Many of these places are nowhere near good public transit (e.g. if someone moved from this area of Boston to Dorchester, then took transit to their same job, it would require 3-4 transfers on packed buses and trains). So now these people are forced to get a car as well.
The worst part of all of this is: who wins here? Not the people forced to leave their neighborhood, not the people who suddenly need to buy a car, not the people who can no longer afford to run a restaurant in the area... not even the rich people living in the expensive high-rises (or not living in -- many are vacant "investments" from overseas). The developers win. They pumped as much money as they could out of the neighborhood, and then moved on to their next target, leaving a less livable city in their wake.
So even if you're a middle-class/upper-middle-class tech worker who wants to live in the city:
1.) Many of the tech jobs are in the suburbs and you mostly need a car to get to them. (There are today more jobs in the city again but many aren't.)
2.) Many of your friends probably live in transit unfriendly suburbs so you'll probably find it hard to get together with them unless they come in to meet you.
Of course, people adapt to what is easier for them and just behave accordingly.
Why don't these people win?
It's a factor of whether the city was built before the industrial revolution. Humans will always default to the easy path.
I think it's the exact same paradigm for software bloat. By having higher powered computers, we build websites without needing to optimize, so now you need a high powered computer to run them.
Building a city without cars is like developing a video game 30 years ago, much more deliberate use of limited resources.
I think part of it was just a cultural preference, perhaps due to the communal nature of Japanese society. Another part of it was to avoid having to import oil, and to not waste wealth on cars. Gas, and vehicles, were taxed heavily, and still are.
- the US allows overnight street parking in many places. In Japan overnight street parking is banned.
- the US mandates a minimum level of parking in pretty much all construction that in practice is very excessive; most developers build the minimum and nothing more, because they don't feel they need the parking (and often the lots are rarely full). Japan has some parking minimums but they are small. And there is no pressure to increase parking minimums to lessen demand for street parking, because overnight street parking is banned.
- when buying a vehicle, Japan requires "proof-of-parking" in a space that is either owned or leased by the buyer. No such mandate exists in the US, so you can buy a car without having provided a place to park it.
The above and other policies basically combine so that Japan has free-market parking with specific properties and buildings provided by the market as demand warrants. Whereas the US builds seas of parking without evidence of demand, so every property is surrounded with a sea of parking that pushes properties further from each other and causes driving to increase in a vicious cycle.
https://www.reinventingparking.org/2019/12/learn-from-japan....
good point. seems a little different in the US since lots of towns were settled after the industrial rev. Japan being an island I would imagine most land was already accounted for.
It might be that instead of constrained by travel, they are constrained by real estate value.
Still, I generally agree that the permitting process in many places is ridiculous, especially in big cities. But many people do want to live in a house with a yard; it’s not like the government is forcing people to do so.
>they're revitalizing as lifestyle areas that are very expensive to live in.
Almost every inch of the US and Canada has a litany of rules saying that buildings have to be 20’ or more set back from the street and have to leave 5-10’ on each side clear on the sides and rear. Usually they are limited to two stories and in some cases only one.
A lot of places take this further with rules on how much of your house has to be brick, or what color the roof can be etc. And since that’s still not enough to please some people’s desire for perfect conformity, most modern homes layer on top of this special HOA rules, for example restricting what kind of window shades are acceptable and how tall and green your grass most be. These rules are enforced by the local municipality and backed by the force of the police.
I have no doubt that there are many people who like single family housing and would buy designs like the common cookie cutter standard if it was part of a truly free market menu, but how much genuine demand exists we will never know, because virtually nothing else is legal and it hasn’t been for two generations now! People generally don’t “want” things they’ve never experienced and have no access to.
Just to drive this point home, imagine we passed a law saying that people were only allowed to eat seafood of certain dimensions and without tentacles. Fish, shrimp, and lobster between 1-7 lbs are OK. No squid or octopus. You can cook them however you want, except no grilled salmon is allowed in Vermont. Any other food requires years of community hearings to acquire one-off conditional approvals on a meal by meal basis.
Would you find plenty of people who liked seafood and defended this system? Yes. Would you know anything about people’s true preferences if they were allowed to be omnivores? No.
That’s what our world has been reduced to, and it’s the product of an almost unfathomably deep and Byzantine regulatory complex by which the government micromanages the built environment around us.
Also, I suspect that there are more towns out there that are dense and walkable than you realize, and more HOAs that are useful and reasonable (and that therefore never make the news) than there are terrible ones. The one my parents are in seems to have been run entirely without drama for decades; it just cleans the community pool and mows the median of the central avenue and replaces the sign at the front of the neighborhood every so often. A few years back a contractor replacing a culvert caused a flood and damaged a street and some houses; I’m not sure if the HOA hired them or the city did. Either way, the road was repaired and the pond refilled, and this is the most dramatic thing that’s ever happened in the area.
A lien just means that the house cannot be sold without paying the lien holder. Liens are actually quite common; any house bought with a mortgage also has a lien put on it for the balance of the loan. This forces you to pay off the loan if you sell the house.
If the house is put up for auction due to a foreclosure, I think a lien holder could recover their money from the sale price, or even gain ownership of the property. At that point the police might be involved in order to evict the former owner. But the HOA’s lien cannot cause a foreclosure, I think. That requires either defaulting on your mortgage, or a tax lien put on it by a municipality, state, etc.
Honestly, a town or city could make ridiculous rules about the length of your grass as well, and you would have just as much trouble or more. There are certainly enough horror stories told about HOAs to make a person wary of them. If all they do is manage property owned in common by the residents, then they’re usually fine. When properly run they are the most boring type of government ever invented. All they have to do is clean the pool regularly, mow the grass from time to time, or save up enough to buy a new roof for the building every couple of decades.
Meanwhile the city you live in probably sold hundreds of millions of dollars in bonds to buy a new football stadium, which earns hundreds of millions in yearly revenue. Naturally, they gave the owner of the stadium all that money and a tax break to boot, just to attract them to the area. Sales taxes went up a bit because of the increased tourism, but not enough to cover the bond payments, so your property taxes probably went up too. The mayor’s cousin’s construction company made a pretty penny building parts of the stadium, and his wife earned a bundle as a motivational speaker giving talks at conventions funded by the company that sells the concessions. Which is worse?
Certainly you always need to keep on top of what your HOA is doing, but you can’t ignore what your town is doing either.
1. We don't know whether or not consumers actually like having touchscreens in their cars as the primary means of control, because the "free" market lacks any other choice.
2. We don't know whether or not consumers actually like having TVs with built-in "smarts" (as opposed to, say, a box or stick that one can upgrade/replace at any time without having to replace the entire TV), because the "free" market lacks any other choice.
In order for a free market to exist, it has to be, you know, actually free. That means having some actual choices, and without coercive pressure toward a particular choice.
What makes the housing market even worse, however, is that said lack of choice is almost always through government fiat - making it even more impossible for a competitor to offer choices different from the ones currently in vogue.
At some point, we the people need to stand up for ourselves and tell NIMBYs and such to go pound sand instead of actively making our lives as difficult as possible simply because they can.
I don’t own a television myself, but surely there must be _some_ dumb tvs still available. If not, then just buy a computer monitor instead.
I think that these two examples are probably overreaching.
However, I agree that zoning and building codes can be overly restrictive. If you want to get away from them, move out of the city. The county rules are often less restrictive.
They seem to be ubiquitous among all but the most budget of models. There might have some buttons, sure, but the vast majority of interaction is through a touchscreen. And this predates the brand you're likely thinking off, too. When I rent a car, regardless of make or model, there's a touchscreen (with a handful of exceptions, and those exceptions are pretty far on the low end of rentals).
And usually it ain't even a good touchscreen; the overwhelmingly vast majority of them over the last decade have been clumsy imprecise resistive ones - which is probably "reasonable" for those wearing gloves, but that problem would be avoided entirely by, you know, not pushing for touchscreens as the primary means of input.
> Maybe some have smaller screens, for a navigation system that you can pay extra for?
The screens themselves are becoming increasingly standard, even without the navigation system. None of the cars I've rented in the last 5 years have had a navigation system, yet the vast majority of them had touchscreens, and those touchscreens were mandatory for anything beyond the most trivial of operations.
> I don’t own a television myself, but surely there must be _some_ dumb tvs still available.
If you want 4K, Sceptre is literally the only option of which I'm aware. That is, accordingly, the only brand of TV I've bought in the last 5 years.
> If not, then just buy a computer monitor instead.
Monitors of sizes suitable for watching something in a living room from a couch are vastly more expensive than even the highest-end "smart" TVs. And that's assuming you can even buy them; such monitors are intended for things like digital signage, meaning that businesses - not consumers - are the intended customer.
> Monitors of sizes suitable for watching something in a living room from a couch are vastly more expensive than even the highest-end "smart" TVs. And that's assuming you can even buy them; such monitors are intended for things like digital signage, meaning that businesses - not consumers - are the intended customer.
Funny how the size of monitor that is considered “suitable for a living room” has changed over the years.
I think what you’re saying is that we don’t have a free market because the products advertised to consumers are more narrowly tailored than they appear. I disagree. I think that consumers have more information available to them than ever before at any point in history. If they have strong preferences, then there is nothing stopping them from getting exactly what they want. If they just want a nice looking flat–panel TV, and don’t want to spend a lot of time researching TVs, then they don’t have to bother. We should not even want them to have to bother, in that case, because that wouldn’t satisfy their values.
The old adage “The Customer is Always Right” applies here, in its original meaning. Whatever product sells the best is by definition the one that is most fit for the market, and we can't complain that it’s ugly, or not as well–built as it ought to be, or that it’s not fit for our particular purposes. If it sold well, then it wasn’t ugly to the people who purchased it, it was built well enough for the people who purchased it, and it fit their purposes well enough that they spent their hard–earned cash on it. It’s no good looking down our noses at them; they just don’t have the same tastes or preferences at us.
Maybe there’s a hypothetical product that could have sold better than whatever is selling the best right now, but there are often good reasons why those aren’t available yet. iPhones, for example, sell well primarily because they are trendy and hip. There are plenty of Android phones that are just as good, or even better, but they don’t satisfy people’s need to be trendy and hip. Maybe once iPhones lose their cachet, then the Android phones with the best features and technology will sell better. Or maybe by then Symbian will turn the market on its ear and become the big new thing. Or maybe brain implants that give us telepathy will make phones obsolete.
I think the market _is_ free, in spite of trendy things like iPhones and smart TVs. Certainly in some areas, like architecture, the government puts its thumb on the scales pretty heavily and distorts the market. Houses and apartments can’t be too small, because that wouldn’t be good for the people living in them, and other paternalistic rules of that type do distort the market. They do make it less free, by artificially limiting the available choices ahead of time.
These loans are taken out by people that would have to pay still-higher rates.
How often can the seller repossess a car successfully (I assume these devices makes it way easier to do so). And how often is the vehicle in a good enough condition that it can be resold? Repossession has a cost, but how many months are required to be able to repossess and turn a profit by then reselling the car?
Kind of an implicit assumption in that question that just because the owner is missing payments and has bad credit they're dirty or the car is beat to hell. Any ways there's markets for cars in every shape between pristine and just on the usable side of totaled.
> how many months are required to be able to repossess and turn a profit by then reselling the car?
They can sell it to an intermediary or send it to auction pretty quickly.
In many cases, the court requires it goes to auction to demonstrate it was sold "at market value". Lenders don't really like to repossess cars - we are in the business of putting people IN to cars, not taking them OUT.
So they take a $1,000 car from auction, sell it for $3,500 or $4,000 at 18% interest, with a loan structured so that all the principal is paid at the end, it doesn't take long for them to be in the black even if they have to repo it.
https://www.latimes.com/projects/la-fi-buyhere-payhere/
I dealt with this myself once, and will never do so again. Also, they tried to penalize me for paying early to get out from under them, and refused to send my title until I threatened to sue with all my voice recordings of every phone call. They tried to say I could only pay advance payments, not pay down my principal, and tried to extend my contract length two years after purchasing my loan without my consent or knowledge, despite having a written contract forbidding the car lot from selling my loan.
Wait. If the borrower could afford that down payment, and that's what the car cost originally, then why couldn't they have just bought a similar car outright from a similar seller? Is this purely a matter of ignorance being exploited?
You might be able to find a similar car at the same price in a private-party deal, but it would entail skimming newspapers/websites and then finding transportation to each seller's home to see one vehicle. In contrast, you can probably get a bus to a scummy dealership located on a main commercial street and see dozens of lemons at once.
I also suspect there's a perception of legitimacy from a dealer-- that a private-sale vehicle could be faulty, but one being sold commercially can be assumed roadworthy.
These auctions are where your car gets sold after you trade it in to a dealership or sell to Carfax, so a Nissan dealership doesn't have to worry about trying to sell a 2013 Chevy Malibu themselves. And the trade in value you get is usually low enough that they aren't in danger of not making a profit. Then they get purchased by various entities, sometimes Carvana, sometimes normal brick and mortar dealerships that specialize in selling used cars and also poverty industry buy here pay here lots.
For what it's worth, I purchased a car in cash from one of those buy here pay here lots once. I had sold a car and needed something cheap to get around in for a while. It was a really bad experience all around - the car they sold me was a total lemon, even though the Carfax was pretty clean and the model had a reputation for being reliable. They misrepresented stuff (A/C had a serious leak)
They also tried to get out of even the most basic obligations they had (Paying $20 to get the emissions checked - where I live the car has to pass that test and dealer has to pay for it.)
If you need a cheap ride, I'd 100% go with buying from a private seller over going to one of those places.
I'm glad to have an experience like that - it really makes you realize how bad things are when you don't have any power in a situation. And why it's so important to have the government step in and say "no, you can't do that." Which our country doesn't have nearly enough of.
I was a young 20 year old with a brand new baby and a decent job. My prior car was a beater and constantly broke down. I went to a 'dealership' thinking I'd get a better car, and hey, it's 'buy here pay here'!
I was looking at a really good condition crown victoria. It was a family sedan, had one prior owner (a winter texan), who had kept all the paperwork for every oil change and service done.
The down payment? 4500. The bi-weekly payments? 250. So, 4500 down, 500/mo for I believe 6 years. The kelly blue book value of the crown vic? 4500 in mint condition. So not only had I paid them the full value of the car, as a down payment, but they were getting me for ~6 years of payments, so had I paid the minimum and let the loan ride the full 6 years, I would have ended up paying ~$36k US for a $4500 car.
When I met someone who knew cars and prices, he informed me how badly I was being ripped off and to pay off the principal asap to get out from under the loan. Of course this was made complicated when they sold my loan.
If the company I bought the car from was bad, the company they sold my note to was the Devil himself. Constantly threatening repossession, beyond rude, calling friends and family ('just references not co-signer, it would be illegal to contact them abiut financial matters!'-more bullshit.
So, it's a combination of desperation, ignorance, and youth I guess, and neither my ex-wife nor I having people to turn to for advice back then.
As an aside there were no smart phones yet, so it wasn't as though I could search this stuff while on-site.
I just couldn't have imagined as a young man that someone could be so incredibly unscrupulous.
All of the above is especially true during tax season when they make 99‰ of their money.
Edit to add- want some weekend fun? Grab the KBB app (wrapper sucks actual website is better), head to the poor side of town to buy here pay here's, and check the vehicle's down payments against the KBB max value =)
Also, many states require that repossessed cars are sold at auction, and the proceeds go towards the balance owed (aka the poor person who borrowed the money).
Usery laws are complex, and it is difficult to know why the lady in this article got a loan for 20%. That is unfair and I feel bad for her.
and non-dealers aren't allowed to buy cars at these auctions
I can't stop re-reading "a clause in her auto loan contract that restricted her from driving outside a four-county radius". Is that a normal thing in auto loans? Restricting free movement? How is that even legal?
The options were for this lender to not lend this person a car, or lend this person a car with certain conditions reducing the lender's risk to acceptable levels. Car sales aren't a monopolized business, and there's plenty of competition, so I also don't see any evidence of collusion on the side of the sellers.
Also, they don't "set" the rules. The rules are set in a contract and contract is bilateral.
Personally, I would protest VERY loud if I found my company was doing this.
Also, I'm mostly certain we do have trackers on many of our cars, and I would imagine the data is transmitted securely so husbands can't use that signal.
It won't matter if the data is transmitted (and stored) securely, a husband concerned about his wife will have enough data about the auto contract to use some social engineering and get the car's location from the lender.
I had the same thing, with a rent to own furniture place, 27 years ago.
I moved from one side of the country to the other, to open a new corporate office, but the move was hasty. 2 weeks from decision to hitting the road.
I just packed up everything, not thinking about the TV I rented-to-own. When it came time to pay, I had also switched banks, so I called them.
After I explained that I moved, and wanted to setup a new debit-from-account, the woman on the other end lambasted me, on and on, explaining breach of contract, that I stole the TV, I'm a thief, this sort of thing. Obviously my mistake for not reading the contract, and they were local only, so they had the same sort of geo-only clause, but at the same time I called them! No late payments, completely current, yet they unloaded on me like I was 6 months late and had planned some sort of elaborate theft.
Fed up with the abuse, I asked her to just get over it, and tell me where to send new payments. Nope, I was apparently a thief, an ass, a liar, on and on again.
I cut that short, asked again how to send payment, or do they not want anything? Again the yelling. I shouted goodbye and hung up.
I had given her my new address and phone number yet never heard from them again.
With these sorts in this industry, I am not surprised they just towed.
The lender should have spoken to her and adjusted the allowed region rather than escalating immediately to a towtruck. Ideally she would have had the presence of mind to call her lender, but some understanding should be shown.
> If the lender could so easily locate the client, Ms. Kleinpeter said, what was stopping her husband?
This makes no sense. Her husband doesn't work for the auto lender. Why would he have access to that? It feels dishonest/manipulative to use this argument.
"Hey, my car went walkabout and if I report this to the police it's going to take forever and cost a lot of time and money for all of us. I need to find it and you folks have a tracking system on it. Where is it? Thanks."
I suspect that would probably work in 90% of the cases. These aren't exactly the most reputable people. A little bit of cash might get another 5% of the cases.
Since he is the husband, his name is likely on everything as well, so he has a legal right to find the car.
What's worse: a lot of abusers make sure to put only their own name on things so that what the wife did is nominally illegal. A little bit of nominally legal manipulation and you might actually be able to get the actual police to do all the legwork for you.
No.
But the kind of "buy here pay here" places that use these devices are sellers of last resort. Basically the vehicle lending equivalent of a payday lender.
For moving to a different country that's basically the status quo. At the very least, you need the lienholder's authorization if you want to get the vehicle out of the country, customs will not let you export it if you don't have a clean title or authorization from whatever lienholder.
It's not totally unusual for a contract to stipulate residency. It's fairly common to do that for a lease agreement. The lender is on the hook for the outstanding balance on the loan if they can't get the debtor to pay up. That collateral just up and disappearing substantially changes the risk associated with the loan. I don't see why it should be illegal to write up an agreement along the lines of "I'll loan you the money for this car, but you have to park it in the surrounding area until it's paid off". No one is claiming that the agreement required the debtor to live in that 4 county radius, just that until they owned the vehicle outright that the vehicle had to be kept there.
As for the argument about how it's endangering the woman from the article, is the car hers or not? If it's in her name then this is just idle speculation that the lender would disclose that information to the abusive husband. If it's not in her name then there's nothing stopping the abuser from just contacting the lender and telling them to pound sand the car is gone. It's not like it's hard to get them to put the car up for repossession and have them pick up the car and disclose the location the next time she goes to WalMart. Even without the GPS tracker it's already commonplace for lenders to contract out repossessions to third parties who trawl parking lots and subdivisions with ALPR cameras looking for cars up for repossession.
The thing this article casually omits throughout, aside from the opening, is that these are sub-prime borrowers. They have a history of poor credit. They probably are not putting much money down. They have a history of being late on payments. In order to get the lending terms THEY find favorable, they agreed to install an interrupt device.
I just purchased a car without one and got a great rate because I spent years... YEARS! Fixing and improving my credit history.
These people want the same terms without the work or change in behavior.
America has a long and honored tradition of mechanisms preventing some clauses in contracts to be legal. IANAL, but maybe a next patch to laws could be to forbid such behavior (on the side of lenders) as predatory. Or maybe more sane approaches are possible.
It's even more important when some clauses can be enforced mechanically, without going through the legal system. This underscores the importance of having the ability to negate mechanical means to enforce contract clauses - at least in some cases :) like this. With rise of IoT, the problem seems to be getting more urgent.
"You can buy this TV on credit, but you're only allowed to watch the news on it".
"I'll loan you money to buy an oven, but you're only allowed to roast chicken in it".
For any other product it seems ridiculous, and rightly so.
The car obviously has some kind of tracking device in it for them to be able to tell where it is, and that it has even violated this clause, so they can't be afraid that she'll drive off into the sunset, never to be heard from again.
Aside from the Kafka factor, it also limits her to job opportunities found only in those counties, which would make it harder for her to improve her situation than if she had free movement.
> These people want the same terms without the work or change in behavior.
Nobody's arguing that a subprime borrower should receive the same interest rate as someone with a good credit history, but limiting the use of the vehicle is an entirely different scenario, and one I'm struggling to think of any justification for.
Miss a Payment? Good Luck Moving That Car - https://news.ycombinator.com/item?id=8365129 - Sept 2014 (80 comments)
Loans encourage over-consumerism
The only exception is maybe student loans, I don't know much about this because I've studied in France where education is almost all free till the end (engineering degrees)
Even for a house/apartment, I saved up for about 15 years and then I could buy one
That's much easier said than done in a society where reliable personal transportation is frequently a condition of being able to afford anything. Kinda hard to earn money if you can't get to work.
Ideally, there'd be some sort of socioeconomic safety net - like, say, a universal basic income - to provide an alternative means to bootstrap one's life and escape poverty. Unfortunately, my country seems to be dragging its feet.