There is a new subprime bubble in America: The subprime car loan bubble. Similar to the mortgage crises of 2008, car lenders are making shoddy car loans to consumers with bad credit. Oftentimes, these loans come with terms that take advantage of the most desperate consumers, by charging high interest rates to those with bad credit or no credit at all. Many of these loans are very profitable for the car dealership, so Wall Street is pouring money into these markets because the high interest rates yield steady profits. Oftentimes, these loans are packaged and sold to third parties, just like mortgages were packaged and sold in 2008. This process was detailed in a recent article in the New York Times.
Subprime lenders are loosening credit standards because they know they can repossess their collateral without using the judicial process. In Illinois, a car lender can install a device that turns your car off if you miss payment. Also, a lender can repossess your automobile without going into court. Nonetheless, we need our cars so that we can get to work and earn money to meet our monthly budget.
In a subprime car loan, you might not realize how much you are actually paying for your car. While the dealership told you that you got a good deal by paying $15,000.00 for a used car, you may not realize how much you are actually paying for your car. If you financed a car for $15,000.00 over a five-year period at 19% interest, you will end up paying over $6,400.00 in interest. Moreover, if you purchased a used car, it may not be in working order by the time it is paid-off.
At Olstein Law, we are here to help. If you are having trouble making your car payments, you might be eligible to lower your payment by filing for Bankruptcy. In a Bankruptcy, you can modify the interest rate on your loan to make the payments more affordable. Or you might be able to get out of your loan completely. We have helped hundreds of consumers facing repossession by helping them modify their car loans. Contact us online today to start discussing your options.