Buy here, pay here. What’s the next sub-prime market? Made-to-fail used car loans. That’s right, and the business model is incredibly simple – sign, drive, default, repossess, resell. It’s actually a perfect scam. When buying a used car, when the dealer is also the lender, the worse your credit, the better the deal for the lender. Why? As soon as the car is repossessed, it can be resold again, often many times over.
And guess what? Wall Street is now starting to repackage these loans as derivatives – just in time for Christmas. Continue reading in a special three-part series in the L.A. Times as Ken Bensinger exposes the wildly profitable world of user car dealerships.