JALOPNIK INVESTIGATES The Car Loans That Never Die

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JALOPNIK INVESTIGATES

The Car Loans That Never Die

Some credit companies have been shaking down car buyers for decades.

By Ryan Felton
42 minutes ago

Richard Parker locked down a job at a Ford plant in the Detroit area, and, like most residents of the region, needed a car to get to work. It was 1991, and at the time he had shaky credit, so it was plenty difficult finding a company willing to lend him money for the purchase. That changed with Credit Acceptance Corporation, one of the largest subprime auto lenders in the U.S. But he never imagined he’d spend the next two decades paying for it.

In May of that year, Parker went to a dealership owned by Credit Acceptance’s founder, Don Foss, in Redford, a Detroit suburb that borders the city’s west side. After talking it over, a salesperson at the dealership scratched out an agreement for Parker to purchase a grey 1988 Chevy Blazer for $16,000. Parker put $3,390 down up front; Credit Acceptance agreed to finance a $9,198 loan at 22 percent interest, meaning Parker would have to pay about $3,500 in additional finance charges over the life of the 36-month loan.

The original MSRP for a 1988 Blazer was about $12,700, and like any used car, it had already depreciated in value by the time Parker had signed the sales contract. Parker knew it wasn’t the best deal, but that’s often the reality for a subprime car buyer with rough credit and not a lot of cash: dealers and their financiers are essentially free to set rates and purchases as they please. The reason for high-interest transactions, the dealer and lender’s argument goes, is to account for the risk they’re taking in financing a low-credit buyer’s car.

Parker came to actualize the risk he’d taken on about two years after starting at Ford, when he fell ill with a serious virus and had to go on disability. ... “I almost died,” Parker told Jalopnik last month. ... Then, he fell behind on his $351.28 monthly car payments. So, in late 1994, Credit Acceptance had the Blazer repossessed. He hasn’t seen it since. ... “That car’s been gone, it’s been 20 years,” Parker said. But his debt hung over his head for more than two decades, growing in size and scope even as his wages and income taxes have been garnished, to the point where it was double the original loan’s size—plus interest. Thanks to the terms of that loan, and Credit Acceptance’s ability to involve a debt collector for nearly a quarter century, Parker kept paying and paying on a used ’88 Chevy Blazer, a car note that never seemed to die.

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