Subprime loans are making a comeback, this time for used cars

When you think back to 2008, what is it that you remember most? Well aside from the United States electing its first black president, the most memorable event of 2008 for most people was probably the financial crisis, which was one of the worst in human history. The crisis happened as a result of the millions of loans that were being handed out like hotcakes to subprime borrowers. Unfortunately, it looks like history is about to repeat itself.

As usual, nobody learned anything from the financial crisis, and subprime loans are starting to make a comeback, under “carefully controlled conditions,” and you know they’re careful, because a bank said that, and banks never lie about anything. And there’s even more good news, for fans of subprime loans. Because they’re not restricted to just houses. They’re now being given out to people who want cars. Specifically, used cars, according to the New York Times.

An investigation by the Times found that interest rates on these subprime loans can exceed 23%, the amount of money being given to borrowers is often twice the amount of what those cars are actually worth, loan officers are fabricating information on applications without the knowledge of the applicants to make sure they’ll be approved no matter what, loans are often handed out to recent immigrants who aren’t fluent in English and haven’t been able to access a translator for the loan documents, and that they’re being bundled up in nice, neat packages to sell to other financial institutions.

This is almost exactly like all those other subprime loans, pre-Great Recession. We’re doing well, so far. But what’s better, is that even if the person trying to get a loan sees how awful it all is, and tries to back out, horrifically predatory lenders start doing all sorts of criminal things, like threatening to keep the borrowers’ down payment if they don’t sign the contract.

Of course, the dealership industry says that these practices are the results of a few rogue actors, and they are Definitely In No Way representative of industry-wide standards. Despite the fact that so many people are paying for loans that are worth more than the cars themselves, like one woman that the Times found who was also paying for a life insurance policy that was supposed to keep her payments up-to-date, just in case she died. And furthermore, all those subprime loans are being bought up like they’re covered in nothing but the finest golden tinsel. Read more about the story here.