Usury - Abuse of the Low Income Family

[Billyd]

The most popular purchase made with the income tax return of younger taxpayers is down payment an automobile.

My granddaughter and her husband are in that category. They have one child and an income of $600/week. They have a small home that is paid for, and utilities are around $200/month. He works about 5 miles from home. Their car broke down last November, and they depend on other family for transportation. They need a dependable car with low mileage. In shopping around, the best price for what they need is around $20,000. They have $5000 to put down on it, but they have no credit. Lenders will finance $15,000 at 24 to 27%. Interest alone is $300 per month. The normal interest rate for someone with good credit is 4% or about $50 per month.

The reason given was high default rate. I can understand why. Paying $600+ a month for a 5 year old car is ridiculous.

What do you believe is a fair interest rate?

 

[shittim]

Must be a better deal out there. Ask His guidance.

 

[Lynx]

Shoot, I sure wouldn't be able to afford that!

If that's the lowest price for what they need, they may have to just get something cheaper to get by for now and see what the future brings.

I drive cheap, older cars, but I don't pay much for each one. When one dies beyond feasible repair, I can get another one cheap. They might not be as dependable, some accessories might not work (cigarette lighter, radio, whatever) but they get me from point A to point B.

 

[Gideon300]

The most popular purchase made with the income tax return of younger taxpayers is down payment an automobile.

My granddaughter and her husband are in that category. They have one child and an income of $600/week. They have a small home that is paid for, and utilities are around $200/month. He works about 5 miles from home. Their car broke down last November, and they depend on other family for transportation. They need a dependable car with low mileage. In shopping around, the best price for what they need is around $20,000. They have $5000 to put down on it, but they have no credit. Lenders will finance $15,000 at 24 to 27%. Interest alone is $300 per month. The normal interest rate for someone with good credit is 4% or about $50 per month.

The reason given was high default rate. I can understand why. Paying $600+ a month for a 5 year old car is ridiculous.

What do you believe is a fair interest rate?

Interest should be no higher than a few % above inflation. My wife was able to get a $28,000 loan based on the fact that she owns her home. Interest rate is around 5%. It's variable, so the repayments have gone up. They are about $420.00 a month. The bank was happy to lend the money even though we are pensioners.

These are Aussie dollars, about 2/3 the value of US dollars. The principles are the same. Maybe the bank could help rather than finance companies. Shop around. There are finance brokers who might be more reasonable.

 

[Seeker47]

I find this to be one of the most troubling posts I have read on CC in a long while. I want to say to this young family, "Don't go into debt!"

They have no house payment. They are getting by as a family. They have somehow saved $5K; use that however you must. Lynx advice is sound. If you go into debt, even with a modest interest rate, the vehicle you buy will be worthless before your last few payments.

The system is rigged against you and it will only get worse. Debt is the road to enslavement, YHWH made that clear to his people years ago. History has proven his wisdom. As society ages and we draw closer to the end our guard must be up. Buy into this system at your peril.

 

[MsMediator]

The most popular purchase made with the income tax return of younger taxpayers is down payment an automobile.

My granddaughter and her husband are in that category. They have one child and an income of $600/week. They have a small home that is paid for, and utilities are around $200/month. He works about 5 miles from home. Their car broke down last November, and they depend on other family for transportation. They need a dependable car with low mileage. In shopping around, the best price for what they need is around $20,000. They have $5000 to put down on it, but they have no credit. Lenders will finance $15,000 at 24 to 27%. Interest alone is $300 per month. The normal interest rate for someone with good credit is 4% or about $50 per month.

The reason given was high default rate. I can understand why. Paying $600+ a month for a 5 year old car is ridiculous.

What do you believe is a fair interest rate?

I would just buy a car for $5k. He can go to a car auction.

 

[shittim]

Or less, and save the money. Ask for His to show Himself strong in this, He is still a miracle making God.

 

[Lynx]

Interesting how the thread title was phrased. I kinda get the impression that so far this thread is not going at all the way Billyd wanted it to go.

 

[Moses_Young]

The most popular purchase made with the income tax return of younger taxpayers is down payment an automobile.

My granddaughter and her husband are in that category. They have one child and an income of $600/week. They have a small home that is paid for, and utilities are around $200/month. He works about 5 miles from home. Their car broke down last November, and they depend on other family for transportation. They need a dependable car with low mileage. In shopping around, the best price for what they need is around $20,000. They have $5000 to put down on it, but they have no credit. Lenders will finance $15,000 at 24 to 27%. Interest alone is $300 per month. The normal interest rate for someone with good credit is 4% or about $50 per month.

The reason given was high default rate. I can understand why. Paying $600+ a month for a 5 year old car is ridiculous.

What do you believe is a fair interest rate?

0. Usury is legalised theft, just like fiat currency is legalised forgery. The only ones that should be charged usury are our enemies (e.g. Communists, LGBTQPs, oligarchs, Bill Gates, Microsoft and the Biden family).

 

[arthurfleminger]

The most popular purchase made with the income tax return of younger taxpayers is down payment an automobile.

My granddaughter and her husband are in that category. They have one child and an income of $600/week. They have a small home that is paid for, and utilities are around $200/month. He works about 5 miles from home. Their car broke down last November, and they depend on other family for transportation. They need a dependable car with low mileage. In shopping around, the best price for what they need is around $20,000. They have $5000 to put down on it, but they have no credit. Lenders will finance $15,000 at 24 to 27%. Interest alone is $300 per month. The normal interest rate for someone with good credit is 4% or about $50 per month.

The reason given was high default rate. I can understand why. Paying $600+ a month for a 5 year old car is ridiculous.

What do you believe is a fair interest rate?

I don't understand why they are looking at a used car for $20k???????? I realize that the prices of new cars has risen sharply, but you can still buy a new car, with a 5-10 year warranty for less than $20k.

If the banks won't loan your grandchildren the money, why don't you and the rest of your family start a pool, pitch in, and loan them the money they need?

And, finally, it doesn't look as though this is a poor family. Most people today are in a pinch because they have to make huge house payments or rent payments. Your grandchildren own their own house, so this isn't a problem. I own my own residence, have a 13 year old car, and am living off Social Security and getting by very well with less than your grandchildren. I'm even able to save up a few $hundred$ each month, for my emergency fund.

Since work is only 5 miles away, maybe they should think of buying a Vespa scooter for a couple of thou, great on gas, and use it to go to work. Also, they only live five miles from work, about a 10 minute drive. Why don't your relatives continue supporting them and drive them to work?

Many solutions to this problem, but don't blame the banks especially if you and your extended family won't loan them the money.

 

[Billyd]

Many good points here.

They have a one year old baby so going into debt for an auto is not their first choice. Used cars around here are in many cases (6 years old or less) selling for almost as much as new cars. They are shopping, but the pickings are poor.

Their house is best described as a tiny house (one small BR, small Bathroom and a small kitchen/dining/living area). He is line for a management job soon, and they plan to add to the house.

I really wanted to address the interest rates being charged to those who can least afford them. For example, my bank charges 22% interest for a first time credit card for a young couple. If they pay on time, and do not exceed their limit, they lower the rate to 18%. That's just plain usury. They pay me 1.5% when I use mine, and charge me 6.9% if I carry a balance. I charged $10,000 on my card so I could buy a car while waiting my insurance settled. They paid me $150 for a 31 day loan. If I had been a low income adult, I would have paid the bank over $200.

 

[Seeker47]

Many good points here.

They have a one year old baby so going into debt for an auto is not their first choice. Used cars around here are in many cases (6 years old or less) selling for almost as much as new cars. They are shopping, but the pickings are poor.

Their house is best described as a tiny house (one small BR, small Bathroom and a small kitchen/dining/living area). He is line for a management job soon, and they plan to add to the house.

I really wanted to address the interest rates being charged to those who can least afford them. For example, my bank charges 22% interest for a first time credit card for a young couple. If they pay on time, and do not exceed their limit, they lower the rate to 18%. That's just plain usury. They pay me 1.5% when I use mine, and charge me 6.9% if I carry a balance. I charged $10,000 on my card so I could buy a car while waiting my insurance settled. They paid me $150 for a 31 day loan. If I had been a low income adult, I would have paid the bank over $200.

I am old enough to remember when people were willing to charge a reasonable interest rate and were not so quick to take advantage of those in need. Somewhere along the way greed took their place. There are those charging well above the 22% rate you mentioned and I won't even go into the "Buy here-Pay here" scam that has exploited many. It looks like most here agree with your definition of usury.

I also note the average price for a new car in the US is over $47,000. So much for Henry Ford!

 

[MsMediator]

I have not done this but my driving instructor in the past took students to the car auction. He said that was a great place to get a car.

 

[Billyd]

I have not done this but my driving instructor in the past took students to the car auction. He said that was a great place to get a car.

The car auctions in this area are for licensed dealers only. Also everything they sell are as is. They may look good, but you don't even get to test drive them.

If you find one at a dealer or a private party, you do get to test drive it and have a mechanic pull trouble codes from it.

 

[Lynx]

I don't know about that 6-year-old or less car thing. I drive a 2003 Mazda minivan. It's been doing pretty good so far. Just got an oil change, just about to hit 200,000 miles. Mazda power trains have a reputation for being bulletproof.

I do have a backup vehicle, another old cheapie. It's a 1997 Lexus. Looks like death on toast, but the motor still sings like new.

Maybe they could broaden their age range and see what they find.

 

[ResidentAlien]

I agree they should stay out of debt no matter what. It's the only option to my mind.

 

[shittim]

Scotty Kilmer has awesome car videos on YT, he has repaired cars for decades and gives good info on cars that are a great value and some that we should stay away from.

 

[ResidentAlien]

Many good points here.

They have a one year old baby so going into debt for an auto is not their first choice. Used cars around here are in many cases (6 years old or less) selling for almost as much as new cars. They are shopping, but the pickings are poor.

Their house is best described as a tiny house (one small BR, small Bathroom and a small kitchen/dining/living area). He is line for a management job soon, and they plan to add to the house.

I really wanted to address the interest rates being charged to those who can least afford them. For example, my bank charges 22% interest for a first time credit card for a young couple. If they pay on time, and do not exceed their limit, they lower the rate to 18%. That's just plain usury. They pay me 1.5% when I use mine, and charge me 6.9% if I carry a balance. I charged $10,000 on my card so I could buy a car while waiting my insurance settled. They paid me $150 for a 31 day loan. If I had been a low income adult, I would have paid the bank over $200.

Well, there's no question lenders prey on the vulnerable; especially payday loan places or rent to own. You get behind and sell your soul to one of those places and you never get it back. Credit cards are just as bad. I have a credit card but the only time I use it is if I have to and if I can pay the full balance. A storage place where I wanted to get a unit once only took credit cards; they said it's the only way for them to keep from getting scammed. I used to use it to buy stuff online but now I have a debit card.

I recently looked into getting a car and ran into the same situation where I live. The only low mileage vehicles I could find were way more than I wanted to spend and everything else was junk. People don't park cars in their front yard with for sale signs on them like they used to. You have to know someone and someone you can trust. If your granddaughter goes to church they might ask around there. I've seen signs around town where people are looking for cars in a certain price range; or they might place an ad in the paper and put notices on bulletin boards. People have told me Facebook is a good place to shop for a vehicle but I tried it and wasn't too impressed.

I will pray it works out.

 

[Billyd]

Over the years, I bought low mileage used cars. I like to get them with 30,000 miles or less and no more than 2 years old. I drive them 150-200,000 miles and then give them to my grandchildren when they graduate from high school. I usually get them for about 70-80% of the original sticker. Today the used car prices are close to the original sticker and what they call low mileage is 60-80,000 miles. My last graduates from high school this year, so I'm down to one car.

I have a couple of dealer friends who have been looking for me a good low mileage trade in for my granddaughters family, but people aren't trading. They can't afford a new car or car payments.

 

[Lanolin]

Not sure what the situation is but isn't there listings for cars on Craiglist in the US?
Ask through church too.
There were always places on the side of the road where people sold cars here. (nz)

Mine was someone's second car they had to sell and was sitting in their garage not being used. There are some car collectors that have more than one car. I would not ever go into debt/get a loan from a shark for a car.

Also, if you work for a company, they may give you a company car to drive.
Otherwise, you could fix the car you've got? How much would that cost? And how much to sell it for parts?