Subprime lending is a calculated risk – we know that some of the customers won’t pay, we just don’t know which at the time the loan is made. With higher default rates come higher expenses, and higher interest rates are necessitated to remain solvent.“ That’s a quote made in a statement by Midwest Acceptance corporation, who specializes in high interest car loans for subprime borrowers in the St. Louis area.
Stories like the one involving William Lesinski are becoming all too common in the St. Louis region. Lesinski’s story begins with taking out a ridiculously high interest rate loan for a car to be given as a graduation present for his son, and ends with his wages being garnished – beyond the amount of the court judgement.
Wanting to buy his son a car as a high school graduation gift, Lesinski put $1,750 down and drove off the lot in a 2003 Ford Mustang. The loan for the car was $11,367, and it carried 29 percent annual interest over nearly four years. His son would make the payments, but the loan was in Lesinski’s name. After paying the balance down to a little more than $10,000, his son, who had stopped making insurance payments, wrecked the car, Lesinski said. In 2011, after more than $4,000 in interest had accrued, Car Credit City’s in-house finance arm, General Credit Acceptance, sued Lesinski. Factoring in attorney fees, the court judgment came to more than $15,000.
This post was published at Zero Hedge by Tyler Durden – Jun 6, 2016.
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