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LA Times finds car dealers setting customers up to fail so they can repossess and resell vehicles
This is a fantastic piece of consumer journalism. You just know this happening all over the country, not just in California.
The practice of selling the same car multiple times, known as "churning," was explored in a series of Los Angeles Times articles last year. Now, a comprehensive analysis of California vehicle sales shows that churning turns out to be a surprisingly common practice in the state.
From mid-2008 to this April, 862 licensed used-car dealers — about 1 in 8 statewide — sold at least one vehicle three or more times, The Times has found.
...
Because their clients have little leverage, Buy Here Pay Here dealers can charge interest rates topping 30% and demand large down payments. In some cases, churning can be used to boost profits. Dealers collect large down payments and then repossess quickly when customers default so that the vehicles can be offered for sale again.
...
"A lot of these dealers set their customers up for failure," Garrett said. "They see your pay stub. They know how much you make, and they structure your payments so you can't afford them."
Full story: http://www.latimes.com/business/autos/la-fi-boomerang-cars-20120815,0,4397964,full.story
From mid-2008 to this April, 862 licensed used-car dealers — about 1 in 8 statewide — sold at least one vehicle three or more times, The Times has found.
...
Because their clients have little leverage, Buy Here Pay Here dealers can charge interest rates topping 30% and demand large down payments. In some cases, churning can be used to boost profits. Dealers collect large down payments and then repossess quickly when customers default so that the vehicles can be offered for sale again.
...
"A lot of these dealers set their customers up for failure," Garrett said. "They see your pay stub. They know how much you make, and they structure your payments so you can't afford them."
Full story: http://www.latimes.com/business/autos/la-fi-boomerang-cars-20120815,0,4397964,full.story
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