Is there another subprime loan crisis brewing?
John Oliver, host of HBO’s “Last Week Tonight,” found disturbing similarities between the easy loans dished out for used cars and the mortgage crisis that devastated the economy in 2008.
Now, car dealers are making high-risk, high-interest loans that “trap people with few options into paying vastly more than a car is worth,” Oliver said. “It’s just one of the many ways in which when you are poor, everything can be more expensive.”
The average interest rate on a “buy here, pay here” loan made by used-car dealers is 19 percent, but some buyers are paying up to 29 percent for loans that many default on within an average of just seven months.
To make his point, Oliver insulted a 7-month-old baby:
See Oliver’s full explanation of this crisis-in-the-making in the clip above, which includes a look at what a used-car dealer’s commercial might look like if a little honesty was thrown in.