They’re called “subprime” auto loans – loans on cars for people who probably can’t afford them and won’t be able to pay back the loan in the future. Right now, lenders are handing out these loans like candy. Perhaps you’ve seen the commercials:
“No credit? Have no fear! We won’t even check your credit history!”
“No job? No problem!”
“No money down! No interest for 6 months! No joke!”
And they’re right: it isn’t a joke. Remember the last time you heard the word “subprime” tossed around? It was about mortgages, and it’s what caused the 2008 recession. It’s never good for the economy when millions of people can’t afford their loans.
But that’s exactly what’s happening. Auto lenders are stretching themselves to offer more loans to more people, even if there’s no reason to believe they can pay it back.
This can be a successful strategy for them, but not for you. It keeps you in perpetual debt with extremely high interest rates. They know you’ll keep paying no matter what, because you can’t afford to lose your vehicle. You need it to get to school and work.
Over time, you’ll have paid back the cost of that vehicle, and you’ll still owe so much interest you’ll be in debt for many more years. Plenty of people who take out these subprime auto loans end up paying 3x the value of the car.
So what can you do? Well first off, if you can, avoid these loans. If you can’t afford a car, wait. Save up. Find one you can afford, or use public transportation. I’m not going to pretend this is easy, but I’m telling you as a bankruptcy attorney the alternative is worse: repossession, or debt and stress for years and years. Letters and calls from creditors could last longer than your car does.
Secondly, if you’ve taken out a loan like this – one with high interest that you can’t afford, don’t feel guilty about doing something about it. These lenders knew exactly what they were doing. It’s their job to check whether someone can afford the loan. Now you’re stuck, and they’re trying to punish you for their lack of responsibility.
That’s not OK. Why should you have to live in debt for the rest of your life, or lose your car, or have your wages garnished, all because they didn’t do their jobs properly or even misled you on purpose?
As a Memphis bankruptcy lawyer, I help people with their car debt all the time. This is such a common problem, and bankruptcy is there to help you stop repossession and wage garnishment so these loans don’t cost you your job and follow you the rest of your life.
If you have car debt you can’t pay, I’m here to help. Contact me online today or call me at 901-327-2100 to get started with a free consultation.