Oh look, Yet Another Case of "financing while brown" -- this time from Toyota:
"Here’s how the markup worked: Auto dealers often offer in-house financing. And when a person chooses that route, the dealer sends the buyer’s credit score and other loan risk factors to, in this case Toyota Motor Credit Corporation. The dealer learns the rates the buyer has qualified for, but then is allowed increase it, as the dealer sees fit. That inflated rate can translate into profit for the dealer. It’s usually a small amount—Toyota allowed its dealers to increase rates up to 2.5 percent. But that adds up over years of interest.
The CFPB found that, when the dealer was allowed to decide which customers to charge more, people of color, regardless of their credit, most often paid higher interest."
I guess some gun-toting GOP zealot would call this "progress" from the days of "on contract" home ownership thievery when blacks were first denied mortgages altogether, and then ruthlessly and gleefully ripped off once they were finally doled out access to "mortgages" -- and in the same breath use this as the excuse for why we needn't pay the slightest bit of attention now, but I would beg to differ.
Beyond that, I wanted to (well, selfishly -- of course in the realm of being taken advantage of by corporations, it's all about me!) draw attention to the phrase "when a person chooses that route," aka dealer financing when buying a new car. Granted this is my personal experience so is liable to be tossed out as "anecdotal" by the conservative war machine that only accepts statistical analysis when personal experience conflicts with their ideologies (and conversely will only allow anecdotes when the stats aren't in their favor), but nevertheless -- I would challenge them (and anyone, for that matter -- I'm honestly curious; perhaps it was a dealer-specific policy, though I doubt such a lucrative "best practice" would go unreplicated across every available P&L) to go to a Toyota dealer and try *not* to get the dealer financing.
Your cash is no good here
It was a strange set of circumstances that conspired to produce this experience, which involved some probably loaded (but never breathalyzed...) driver in Vegas who managed to total my car at the very end of a thoroughly exhausting CES (is it ever *not* exhausting?!). No one was hurt, but it was especially exasperating to have to stand and wait by the side of the road in the freezing cold for 2 hours at midnight until the traffic cops could arrive to adjudicate... but anywho, the point is, my ancient old Corolla was deemed a total loss by State Farm.
Which ended up being a blessing in disguise, actually, because writing me a check for the Blue Book value was orders of magnitude greater recompense than I would have received for a trade-in down the road. Being at the time "flush with startup implosion severance cash" with which to add to the State Farm settlement and keen to avoid going right back into consumer debt after having finally paid off all my student loans and credit cards, I decided to be for once Bizarrely Fiscally Responsible and simply pay cash for my new vehicle, a Prius C -- chosen for its at the time most efficient gas mileage I could get short of buying the Car of the Elite Douchebag, the Tesla.
Pay in cash, avoid paying a dime in finance charges. Simple, right? Apparently not to the sales associates at the dealership, who took me into a special back room to "seal the deal" after we agreed on a final price for the vehicle. They handed me the glossy collateral about their financing program, which I waved away and informed them I'd be paying in cash. Did they accept a check?
WHOA NELLY -- JUMP THE FUCK BACK! The look on the dude's face was as if I had suddenly sprouted an additional 4 heads. He leaned forward and pushed the financing pamphlet even farther across the table in my direction, telling me that surely I ought to consider the amazing interest rate deals they had going on currently.
I asked him what kind of deal was going to be better for me than paying $0 for the cost of financing, since I happened to have the cash on hand by way of rare circumstance, and didn't want to take out a consumer loan for no reason. He sat back. There was a long pause. He said something that sounded vaguely ominous about how he would have to consult with his manager to make sure this was going to be an acceptable arrangement. He left the room then, and me wondering why on earth receiving cash money for a product they wanted to sell could possibly be an unacceptable arrangement.
Twenty minutes went by. Thirty. Sitting there absorbed in internet distractions on my phone I suddenly notice how much time has passed, and almost get up to go wandering around looking for this guy -- maybe there's been an emergency? Perhaps he totally just up and forgot a transaction was taking place and had gone home for the day?! It was after their 8pm closing time by then and I could see other associates literally leaving through my vantage point by the window. I wondered WTF.
Just as I was actually getting up from my seat he strides back in with another sheet of paper that looks Spuriously Official, which he proudly plunks down on the desk and begins rattling off a shpiel about how only because I'm such a valued customer (am I? I mean, I just walked in... do we know each other?) and clearly they are trying to wind down for the day and don't we all just want to play nice and go home, they are willing to offer me another whopping 2 percentage points off their already low, low, so fucking low dealership financing interest rate. Surely I would leap at the chance to take advantage of this once-in-a-lifetime opportunity to pay only an extra $864 over the lifetime of the loan instead of not quite double that amount under the previous offer.
But wait... is this guy mathematically-challenged?! Or, wait -- no: he's hoping that *I* am mathematically challenged. And despite having come in with the rare conviction, circumstance, and basic knowledge of how financing works that led me to decide to pay in cash in the first place, he for some reason thinks I am going to be snowed under by this Amazingly Unbelievable Opportunity to pay Toyota Motors an extra 864 dollars for no fucking reason. When I've already expressed multiple times that I intend to pay in cash. And have now waited fruitlessly for half an hour being distracted by the vast gaping maw of a rabbit hole which is the mobile internet.
The hostages were safely released
It took another twenty minutes of firmly and curtly repeating my position, including another need for this Financing Specialist to dart out and "get approval from his manager" to accept a check, before I was finally able to drive myself home in my shiny new hybrid vehicle. If my purchasing research hadn't ended with the depressing realization that, to top the fuel efficiency of my previous car that had been manufactured a decade and a half ago (technology: always improving efficiency! Always progress up and to the right!! ...unless it involves helping America use less fossil fuels, that is) and stay within my price range, the Prius C was my only choice, I might have long since walked out the door in disgust. But I was also bizarrely fascinated by the theatrical machinations this dealer was apparently willing to concoct to try and fleece me out of that sweet, sweet consumer debt money. At the time, it seemed a bit unbelievable that the parlor games that were happening to me, were actually happening to me.
I relay this both by way of caveat emptor if you're thinking of trying to avoid financing for a vehicle, and to note Yet Another Case of predatory lending on the part of our Great and (dis)Honorable Financial Sector whose staggering inefficiency (wait, doesn't this sound eerily similar to the curious lack of "progress" in the fuel efficiency department?! huh.) manages to devour a truly egregious 9% of our Gross Domestic Product. Banks used to operate out of a sense of civic duty to help citizens of our Great Nation obtain capital with which to grow value in the economy and enlarge the proverbial pie for us all, but now they seem to operate out of a sense of Epically Elitist Entitlement to fleece America's people out of every last dime in the name of corporate profits. And now automakers -- and many other economic sectors to boot -- are also becoming banks.
It's getting pretty deep in here. Good thing I have an escape vehicle.