In its established investigative vein, HBO's Last Week Tonight has once again educated viewers on a crisis they may not have been aware of. In an Aug. 14 segment, John Oliver took on auto industry subprime loans, and it was eerily similar to the injustices documented in the 2015 blockbuster film The Big Short.
Much like the mortgage crisis of 2008, which relied on people with poor or no credit to take out loans on housing, the auto industry has similarly targeted vulnerable Americans who need to get places but can't always rely on public transportation, and who would likely be turned away from borrowing money to buy vehicles. As Oliver pointed out, auto companies are luring in customers by offering loans to people without checking their credit scores, or accepting low credit scores if they do.
This has led to dealers selling cars at a rate two to three times their Blue Book value, giving out loans with extremely high interest rates (up to 29 percent), repossessing vehicles when the customer can no longer pay (typically within seven months of buying), charging the buyers, and then reselling them again and again. One particularly unnerving incident Oliver shed light on was a 2011 Los Angeles Times report on 'Buy Here Pay Here' dealerships, which tracked a Kansas City car as it traded hands eight times in three years due to subprime auto loans.
Despite the horrifying accounts of auto dealers taking advantage of people, Oliver reassures viewers that although there are very clear similarities to what is happening now and what happened in 2008, it's highly unlikely that the same result will occur. Subprime auto loans account for less of the economy than subprime mortgages did before the bubble burst. That's somewhat comforting, but it's still difficult to acknowledge that a practice the country was horrified by just eight years ago is happening to another industry all over again.
As usual, Oliver didn't necessarily offer any solutions to the problem, but it's worth being made aware of the effects of this crisis. For those who were hurt in the financial crisis, it's an especially important reminder that this type of behavior isn't limited to one specific industry. Everyone should be aware of the conditions on the money they borrow, whether it's for housing, cars, or even education. The better educated consumers are, the less companies will be able to pull off this behavior.
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