If I can't write something inspirational I can at least write about an overheard conversation that illustrates the perfect antithesis of what it means to be an Urban Hermit:
A middle aged man is talking to someone about his car/financial woes, "What I want to do is trade in one of my three cars. I'll keep one because I like it. One I'll trade, and the third one I'll let the finance company repossess because I'm paying $600 a month for it. But, I want to trade the second one before they repo it and wreck my credit."
That, my friend, is a snapshot of our world today.
In effect, he's gotten himself in deep pluff-mud and wants out. He was told, like all of us are told, that he and his deserve that car, the first one, the second one and the third one, so he made an impulse purchase - three times, and now two out of three of them ain't lookin so hot. So his strategy is to keep one, trade one (by the way, he's what we call in the business "up side down" on the second one. That is to say, he owes more - much more - than it's worth) and dump one on the bank.
I don't judge the guy. He is making a logical economic decision based on how today's world operates. The outcome of his strategy? He'll get a dealer and finance company somewhere to take his second car in trade on a vehicle he'll finance for seven or eight hears, which is five or six years longer than he'll keep it. The dealer and finance company will structure the deal in such a way that he will be refinancing his negative equity from his trade along with the new car. He'll then keep and drive the third one as long as he can without making a payment on it until it goes back to the finance company and his credit takes a hit.
And, in two or three years he'll do it all again.
And, the dealership and finance company will welcome him back with open arms knowing that he'll likely repeat the process. Why? Because they make money doing so.
But... we're supposed to feel sorry for the bank, aren't we?!!
ReplyDeleteI used to work for a credit card company. The people we really made money off of were the people who got charged astronomical rates and got hit repeatedly with late and overlimit fees. They'd end up in Collections, and, after we'd gotten all the blood possible out of that turnip, we'd do a charge-off, which probably had some kind of tax benefit in accounting.
ReplyDeleteMarketing loved the people with marginal FICO scores. Our Risk Management people used to swear Marketing would send out envelopes full of cash if they'd let them.
And, if you multiply it by a few billion times you have the current situation where our public servants play the part of the the borrower with a 320 FICO.
ReplyDeleteSadly, the moral state of society has fallen such that this is an acceptable practice from top to bottom.
When the Visigoths show up on our doorsteps we, like the Roman citizens of yore, will welcome them saying, "anything is better than this mess".