- The video discusses America's obsession with cars and how it affects people's daily lives.
- Many people rely on cars to get to work, and not having a car can make it difficult to hold down a job.
- Some people with bad credit turn to buy-here, pay-here dealerships for car loans, which can trap them into paying much more than the car is worth.
- These dealerships have high interest rates and can repossess cars with little regard for what's inside.
- The video highlights a case where a car was sold and repossessed multiple times, each time at a price double or triple its value.
- Buy-here, pay-here lending has lost market share, but subprime auto lending is becoming more popular and even targeting people who have recently declared bankruptcy.

- Bankruptcy lawyers are seeing an increase in high-interest car loan solicitations being sent to their bankrupt clients.
- Big lenders like Santander and GM Financial have expanded their subprime auto financing.
- There are concerns that the subprime auto loan market could lead to a crisis similar to the subprime mortgage crisis.
- Some experts believe that the subprime auto loan market is smaller and less likely to cause a major economic collapse.
- However, there are signs of trouble, such as lax loan standards and increasing risk for borrowers.
- The aggressive tactics of used car dealers and the risks they are taking are worrisome.
- The video humorously portrays a fictional car dealership that aggressively targets people with bad credit.
- The video highlights the potential for Wall Street to profit from these high-risk loans.
- Overall, there are concerns about the subprime auto loan market and its potential impact on the economy.

Auto lenders can steer vulnerable people into crushing debt. Keegan-Michael Key and Bob Balaban help John Oliver show exactly how.

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-♪ ♪ -♪ ♪ Cars, the muse for America's greatest songs, from the complete works of Bruce Springsteen to Tim McGraw's ode to the American truck.

If you like it up loud And you hear Billy proud

I mean, sure, it doesn't really make sense that they're just driving around in an empty lot, but it looks like they're having fun, so who gives a flying truck?

But America's auto obsession isn't just a hobby.

86% of American workers get to work by automobile, and the remaining 14% presumably commute by public transportation, walking, or in the case of that 1 weird guy in your office named Nathaniel, penny-farthing bicycle.

-♪ ♪ -♪ And if you don't have a car, holding down a job can be a tremendous challenge.

Just watch 1 woman describe her daily commute via public transportation.

I normally still get the kids out on their bus on time.

It's just a matter of not whether I'll make my bus.

This is the first bus, and then I take 2 trains and another bus.

Normally, it takes me roughly an hour and a half to 2 hours on an average day.

If I were to drive to work, it takes me maybe 10 or 15 minutes.

So her commute would be 10 minutes with a car, but without 1, she's literally the length of the movie The Imitation Game away from her job.

Which is to say, 2 wasted hours that feel like forever.

But cars are obviously expensive, which is why many people have to take out loans to buy them.

Everyone is approved at buyer's auto sales, regardless of your credit.

Even if we have 2 repossessions, a foreclosure and a bankruptcy?

Okay, listen, I do not mean to be judgy here, but don't approve the clown.

Genetically speaking, he is programmed for murder.

Now, that ad is targeting people with bad credit who are only eligible for what are called subprime loans.

And nearly a quarter of all car loans are now of the high-risk subprime variety.

In fact, so many are being issued, they recently reached a ten-year high.

And if the phrase, a boom in subprime loans, is making your eye twitch with flashbacks to the mortgage crisis, just wait, We will get there.

But first, let me take you on a tour of the subprime auto loan industry.

And we'll start with so-called buy-here, pay-here dealers who do their own lending.

They've been around for years, and their ads make it all look very simple.

We don't have to send you or your deal anywhere.

The second reason we can get you financed is because we don't even look at your credit score.

In fact, we don't even know what a credit score is.

PG-13, 640 on the verbal, 710 on math, 3 under par.

We've got no idea, and that's why you should trust us.

-------------------------------------------------------------------------------------------------------------------------------------------------- Theoretically, it is a good thing that car dealers lend money to people who can't get financing elsewhere.

But in practice, these dealerships can trap people with few options into paying vastly more than a car is worth.

It's just 1 of the many ways in which when you are poor, everything can be more expensive.

The average interest rate in a buy-here-pay-here lot is 19%, with some paying up to 29%.

And that, that interest is on top of mock-ups and add-ons that can inflate the price of the car.

She went into a Chicago dealership trusting that they would help her.

When she first got to the quick auto lot, she told the salesman she had an upper limit on price.

I told him, I said, I can't afford no car over $3,000.

In the end, Arlene borrowed $8,600 at 24.9% interest over 3 years.

If she had paid off the loan, she would have spent more than $13,000 on a car that was only worth about $3,000.

The only way it's acceptable to sell someone a $3,000 car for $13,000 is if you slip a mint condition X-Men issue 1 into the glove compartment, at that point, you're being generous.

But it's no wonder that Buy Here, Pay Here loans had an average default rate last year of nearly 1 in 3, with most customers who default doing so just 7 months after taking out the loan.

If you put a seven-month-old baby in front of the screen right now, it would not understand anything I'm saying.

It wouldn't even know if I was making fun of it.

Go ahead, get a baby right now, and put it in front of the screen.

You don't know that I'm mocking you, you stupid, wittle face, do you?

7 months is not long enough to do anything.

Now put the kid to bed, you're a terrible parent.

--LAUGHTER AND APPLAUSE --But the problem is...

The problem is, even if you're just a few days late on a payment, the dealership can repossess your car, and when they do, sometimes, it is with little regard for what's inside.

When the mother went to pick up her 3 children at a daycare, she left her nine-month-old in the car, but when she came out, there was no baby and no car.

I wish that when you re-pull a car, you check the car before you take it.

Just don't, you know, take nobody's baby.

Don't take a baby is a good general rule for everyone.

Whether you are repossessing a car, choosing a prom date, or making a selection in the NFL draft.

I don't care what they did in the combine.

And increasingly, it is not difficult for buy-here, pay-here dealerships to repossess your car, because many now install a special device which goes off when your payment is due.

Every 5 seconds, the device is actually beeping at them.

As they're all the way taking the kids to school, all the way to work, it's informing them that they need to make their payment and contact their lender.

However, if they don't, then the device at midnight, most lenders choose midnight as their time of shutoff, device will not allow that car to start.

Okay, setting aside the horror of the fact that they can shut your car off, that beeping sound is unbelievably annoying.

Anyone with a smoke detector knows it only takes about 30 minutes of incessant beeping before you've completely lost your mind.

Oh, I pushed the button, I unscrewed the top, and I smashed the whole thing with the bread maker, and it's still making that sound.

So, the only reasonable option is now to set my...

And once they have repossessed your car, these dealers don't have to refund your down payment, and they might decide you still owe them money because the car is now worth less than they sold it to you for.

So you can easily end up with no car and thousands of dollars in debt.

Meanwhile, the dealer can turn around and sell your car to someone else.

So the truth is, they can make money either way.

And the same car can get sold this way over and over again.

And to prove that, let me take you on a magical journey.

Because a few years ago, the LA Times tracked the sales of 1 car from a Kansas City buy-here, pay-here dealer.

It was a 2003 Kia Optima, much like this 1.

But in April of 2008, it was sold for nearly $11,000, or double its Blue Book value.

The original buyer complained of mechanical problems and refused to make payments.

So, the car was repossessed and sold again in August, before being repossessed again 4 months later, and was then resold after just 3 weeks before being repossessed again from a mother of 3 who, without transportation, lost her job at Walmart.

It was then resold again in May 2009 to an owner who complained of transmission trouble, so the dealer took it back and resold it just 4 weeks later, after which it was, you'll never guess, repossessed again from an owner who later filed for bankruptcy thanks in part to payments he owed on this piece of shit demon car.

It was sold again that December and was repossessed just 5 months later before being resold in May, and it was then, surprise, surprise, repossessed again, even though the owner, a mother of 4, claimed she made every payment.

Times, it was sold 1 last time before being repossessed just 1 month later.

That 1 car changed hands 8 times in 3 years, each time at a price double or even triple its Blue Book value.

At which point, you almost feel bad for the car, which presumably needed 2 sessions of therapy a week just to be able to start its crappy engine again.

Times left it, but we felt so emotionally involved, we actually tracked that car down and discovered that since then, it has been sold again, repossessed again, and then sold yet again.

And when we called the last listed owner, she said it had been stolen.

And I really hope whoever did that drove it straight off a fucking cliff.

Although, I'm guessing even then, some sleazy lobster wound up selling it to a poor, unsuspecting fish.

Now, after seeing that, you may be glad to hear that buy-here, pay-here lending has lost market share in recent years.

Unfortunately, that is only because it seems everyone is getting into subprime auto lending now.

There is a surprising amount of competition to give car loans to people with poor credit.

So much so, people who've recently declared bankruptcy are being actively targeted through the mail.

Just listen to 1 bankruptcy lawyer describe what he's seen.

These are all car loan solicitations, high-interest car loan solicitations sent to my bankrupt clients, people who have already filed bankruptcy.

Here's 1 that looks like a check, and it's made out to $21,000.

I guess it's gonna be a used car, you know, with a signature and everything, sent to 1 of my clients.

Here's 1 that looks like some kind of an official certificate.

They encourage you to apply for a car loan even if you suffered bankruptcy, car repossession, foreclosure, or all of the above.

-♪ ♪ -♪ ♪ That is a slightly weird tone of voice to use there.

He sounds almost excited about a bankruptcy, a car repossession, and a foreclosure.

He's like a doctor saying, wow, you have herpes, HPV, and gonorrhea.

And This feeding frenzy over subprime customers now includes big lenders like Santander and GM Financial.

They have both expanded their subprime auto financing, and there are newer players like Scopus and Exeter who specialize in subprime lending.

And you might be wondering, why the fuck is everyone in such a hurry to lend money to people with bad credit?

I mean, sure, in the mortgage crisis, they were doing that so that they could bundle those high-interest loans together and sell them on Wall Street.

But there is absolutely no way that that is happening.

That is exactly what is happening right now.

And people have actually been worried about this for a while now.

Is there a new bubble that's about to burst in the auto sector?

Does this concern you at all, though, that it could possibly become a repeat of the home loan, boom.

Do you see similarities between the housing crisis and what's going on now with used car loans?

Is there concern now that there's gonna be another subprime crisis, except it's not gonna be mortgages, it's gonna be car loans?

Yes, There is concern that this could be the subprime mortgage crisis, but with cars.

And normally, if you add the phrase, but with cars, to any historical event, it sounds a lot more fun, like the assassination of Abraham Lincoln, but with cars.

Sadly, This is the exception to that rule.

Now, before you panic, experts say there are important differences here.

Subprime auto loans are a much smaller part of the overall economy than subprime mortgages were.

So even if they do go bust, this wouldn't necessarily be the big short all over again, so much as the director video version with Brad Garrett instead of Brad Pitt, and instead of Ryan Gosling, an actual Gosling named Ryan.

-♪ ♪ -♪ And Wall Street firms insist that they have learned their lesson and have set things up in such a way that tons of loans can default and investors will still be fine.

For instance, standards for some of the loans being sold as investments can be shockingly lax.

We've seen deals come to market with very low FICO scores and in some cases, no credit scores at all for the loans, which is amazing.

So some people joke, you know, you really just need a pulse right now to get a, you know, subprime auto loan, so...

Solid set up, hard punch line, potentially devastating effect on the American economy.

And behind closed doors, some in the lending industry openly acknowledge conditions are deteriorating.

In fact, when we sent hidden cameras to a debt buyers conference in Vegas a few months ago, we stumbled on Ken Shilson, the head of the National Alliance of Buy Here, Pay Here dealers.

He sees trouble brewing because he thinks in attempting to keep pace with the big players who've entered the subprime industry, his own dealers have been forced to issue longer-term loans with less money down at higher cost to clients who are therefore at greater risk of default.

And these broader lending trends are clearly terrible news for borrowers, but to hear him tell it, it's a great opportunity for those who buy bad debts and collect on them.

These people have negative equity all the way through, and they're not gonna be able to hold their life together for 7 years.

That is both inspirational and profoundly upsetting.

It's like if the song, I Believe I Can Fly, merged with the rest of R.

Listen, the news, the news that used car dealers are predatory is clearly not new.

But, It seems these days, market pressures are forcing them to be more aggressive and take more risks, to the point where we may be getting close to an industry that looks like this.

No problem, just come right on down today to Crazy Johnny's.

Quick, quick, quick, quick, quick, quick, quick, quick.

But don't take it from me, take it from my cousin, Crazy Jimmy!

quick, quick, quick, quick, quick, quick, quick.

I love the smell of deals in the morning.

Is your credit so bad that giving you a high-interest loan will basically trap you under a mountain's net, which there's no reasonable hope of escape?

you come in today, we've got a beautiful offer for you right

This here is a pre-pre-pre-pre-pre-pre-pre-pre-owned 2003 Kia Optima!

Jimmy, Jimmy, you got to tell the people what it comes with.

I will it comes full of loaded with 4 tires up to 1 engine and a beeping device which emits a sound that will haunt your dreams.

If you check the back seat, this car has a f***ing baby in it.

There is an actual baby in this car right now!

I have serious personal reservations about the situation this town

Look, this car is worth $2,000, but we'll let you have it for 0 down.

And just $200 a month for the next 7 years.

No, no, no, no, don't do the actual math on that.

Act now, and this car will affect every financial decision you make for the best part of the next decade.

Crazy, crazy, crazy, crazy, crazy, crazy, Johnny's!

And the crazy thing is, this piece of shit car is actually an opportunity for Wall Street, too!

If you set aside the human misery this loan has the potential to cause as part of an over collateralized security this can be sold as a high yield investment.


Speaker 0: -♪ ♪ -♪ ♪ Cars, the muse for America's greatest songs, from the complete works of Bruce Springsteen to Tim McGraw's ode to the American truck. -♪

Speaker 1: If you like it up loud And you hear Billy proud

Speaker 0: ♪ ♪

Speaker 1: Then you know what I'm talking about

Speaker 0: ♪ ♪

Speaker 2: Let me hear you say Truck, yeah!

Speaker 0: ♪

Speaker 3: Truck, yeah!

Speaker 0: That song is untrucking believable. I mean, sure, it doesn't really make sense that they're just driving around in an empty lot, but it looks like they're having fun, so who gives a flying truck? But America's auto obsession isn't just a hobby. 86% of American workers get to work by automobile, and the remaining 14% presumably commute by public transportation, walking, or in the case of that 1 weird guy in your office named Nathaniel, penny-farthing bicycle. Get down from there, stop it.

-♪ ♪ -♪ And if you don't have a car, holding down a job can be a tremendous challenge. Just watch 1 woman describe her daily commute via public transportation.

Speaker 4: I normally still get the kids out on their bus on time. It's just a matter of not whether I'll make my bus. This is the first bus, and then I take 2 trains and another bus. Normally, it takes me roughly an hour and a half to 2 hours on an average day. If I were to drive to work, it takes me maybe 10 or 15 minutes.

Speaker 0: So her commute would be 10 minutes with a car, but without 1, she's literally the length of the movie The Imitation Game away from her job. Which is to say, 2 wasted hours that feel like forever. But cars are obviously expensive, which is why many people have to take out loans to buy them. Some from places like this.

Speaker 5: Everyone is approved at buyer's auto sales, regardless of your credit.

Speaker 2: Even if

Speaker 6: this is my trade-in?

Speaker 0: -♪ ♪ -♪

Speaker 5: Approved! Even if I'm self-employed? -♪ Approved!

Speaker 0: ♪

Speaker 7: Even if we have 2 repossessions, a foreclosure and a bankruptcy?

Speaker 5: Everyone is approved!

Speaker 0: Okay, listen, I do not mean to be judgy here, but don't approve the clown. He's a clown. Genetically speaking, he is programmed for murder. Now, that ad is targeting people with bad credit who are only eligible for what are called subprime loans. And nearly a quarter of all car loans are now of the high-risk subprime variety.

In fact, so many are being issued, they recently reached a ten-year high. And if the phrase, a boom in subprime loans, is making your eye twitch with flashbacks to the mortgage crisis, just wait, We will get there. But first, let me take you on a tour of the subprime auto loan industry. And we'll start with so-called buy-here, pay-here dealers who do their own lending. They've been around for years, and their ads make it all look very simple.

Speaker 8: How can we get you financed

Speaker 7: when others can't? 2 reasons. First, we are the bank. We don't have to send you or your deal anywhere. The second reason we can get you financed is because we don't even look at your credit score.

Speaker 0: Of course. In fact, we don't even know what a credit score is. What is a good 1? PG-13, 640 on the verbal, 710 on math, 3 under par. Is that a good credit score?

We've got no idea, and that's why you should trust us. -------------------------------------------------------------------------------------------------------------------------------------------------- Theoretically, it is a good thing that car dealers lend money to people who can't get financing elsewhere. But in practice, these dealerships can trap people with few options into paying vastly more than a car is worth. It's just 1 of the many ways in which when you are poor, everything can be more expensive. The average interest rate in a buy-here-pay-here lot is 19%, with some paying up to 29%.

And that, that interest is on top of mock-ups and add-ons that can inflate the price of the car. So just look at Arlene Jones. She went into a Chicago dealership trusting that they would help her.

Speaker 9: When she first got to the quick auto lot, she told the salesman she had an upper limit on price.

Speaker 4: I told him, I said, I can't afford no car over $3,000.

Speaker 9: She says he was very reassuring.

Speaker 4: Like, don't worry about it. He said, you can handle it.

Speaker 9: In the end, Arlene borrowed $8,600 at 24.9% interest over 3 years. If she had paid off the loan, she would have spent more than $13,000 on a car that was only worth about $3,000.

Speaker 0: Holy shit! That is outrageous! The only way it's acceptable to sell someone a $3,000 car for $13,000 is if you slip a mint condition X-Men issue 1 into the glove compartment, at that point, you're being generous. But it's no wonder that Buy Here, Pay Here loans had an average default rate last year of nearly 1 in 3, with most customers who default doing so just 7 months after taking out the loan. And just think about that.

7 months is not a lot of time. If you put a seven-month-old baby in front of the screen right now, it would not understand anything I'm saying. It wouldn't even know if I was making fun of it. I'll show you. Go ahead, get a baby right now, and put it in front of the screen.

Here we go. Hey, dummy! Hey!

Speaker 3: You don't know that I'm mocking you, you stupid, wittle face, do you? No, you don't! No, You don't! Who knows about that? Not you!

You don't mind! You don't mind at all!

Speaker 0: See? 7 months is not long enough to do anything. Now put the kid to bed, you're a terrible parent. --LAUGHTER AND APPLAUSE --But the problem is... The problem is, even if you're just a few days late on a payment, the dealership can repossess your car, and when they do, sometimes, it is with little regard for what's inside.

Speaker 8: When the mother went to pick up her 3 children at a daycare, she left her nine-month-old in the car, but when she came out, there was no baby and no car.

Speaker 4: I wish that when you re-pull a car, you check the car before you take it. That's

Speaker 2: really... Yeah.

Speaker 4: Just don't, you know, take nobody's baby.

Speaker 0: Yes, exactly. Don't take a baby is a good general rule for everyone. Whether you are repossessing a car, choosing a prom date, or making a selection in the NFL draft. Don't take a baby. You don't take a baby.

I don't care what they did in the combine. And increasingly, it is not difficult for buy-here, pay-here dealerships to repossess your car, because many now install a special device which goes off when your payment is due.

Speaker 10: Every 5 seconds, the device is actually beeping at them. As they're all the way taking the kids to school, all the way to work, it's informing them that they need to make their payment and contact their lender. However, if they don't, then the device at midnight, most lenders choose midnight as their time of shutoff, device will not allow that car to start.

Speaker 0: Okay, setting aside the horror of the fact that they can shut your car off, that beeping sound is unbelievably annoying. Anyone with a smoke detector knows it only takes about 30 minutes of incessant beeping before you've completely lost your mind. Oh, I pushed the button, I unscrewed the top, and I smashed the whole thing with the bread maker, and it's still making that sound. So, the only reasonable option is now to set my... House on fire.

-...fire. -...fire. And once they have repossessed your car, these dealers don't have to refund your down payment, and they might decide you still owe them money because the car is now worth less than they sold it to you for. So you can easily end up with no car and thousands of dollars in debt. Meanwhile, the dealer can turn around and sell your car to someone else.

So the truth is, they can make money either way. And the same car can get sold this way over and over again. And to prove that, let me take you on a magical journey. Because a few years ago, the LA Times tracked the sales of 1 car from a Kansas City buy-here, pay-here dealer. It was a 2003 Kia Optima, much like this 1.

It had a blue book value of $5,350. But in April of 2008, it was sold for nearly $11,000, or double its Blue Book value. The original buyer complained of mechanical problems and refused to make payments. So, the car was repossessed and sold again in August, before being repossessed again 4 months later, and was then resold after just 3 weeks before being repossessed again from a mother of 3 who, without transportation, lost her job at Walmart. It was then resold again in May 2009 to an owner who complained of transmission trouble, so the dealer took it back and resold it just 4 weeks later, after which it was, you'll never guess, repossessed again from an owner who later filed for bankruptcy thanks in part to payments he owed on this piece of shit demon car.

But wait, we are not done. It was sold again that December and was repossessed just 5 months later before being resold in May, and it was then, surprise, surprise, repossessed again, even though the owner, a mother of 4, claimed she made every payment. And then, according to the L.A. Times, it was sold 1 last time before being repossessed just 1 month later. That 1 car changed hands 8 times in 3 years, each time at a price double or even triple its Blue Book value.

At which point, you almost feel bad for the car, which presumably needed 2 sessions of therapy a week just to be able to start its crappy engine again. Now... Now that... That is where the L.A. Times left it, but we felt so emotionally involved, we actually tracked that car down and discovered that since then, it has been sold again, repossessed again, and then sold yet again.

And when we called the last listed owner, she said it had been stolen. And I really hope whoever did that drove it straight off a fucking cliff. Although, I'm guessing even then, some sleazy lobster wound up selling it to a poor, unsuspecting fish. Now... Now, after seeing that, you may be glad to hear that buy-here, pay-here lending has lost market share in recent years.

Unfortunately, that is only because it seems everyone is getting into subprime auto lending now. There is a surprising amount of competition to give car loans to people with poor credit. So much so, people who've recently declared bankruptcy are being actively targeted through the mail. Just listen to 1 bankruptcy lawyer describe what he's seen.

Speaker 11: These are all car loan solicitations, high-interest car loan solicitations sent to my bankrupt clients, people who have already filed bankruptcy. Here's 1 that looks like a check, and it's made out to $21,000. I guess it's gonna be a used car, you know, with a signature and everything, sent to 1 of my clients. Here's 1 that looks like some kind of an official certificate. They encourage you to apply for a car loan even if you suffered bankruptcy, car repossession, foreclosure, or all of the above.

Speaker 0: -♪ ♪ -♪ ♪ That is a slightly weird tone of voice to use there. He sounds almost excited about a bankruptcy, a car repossession, and a foreclosure. He's like a doctor saying, wow, you have herpes, HPV, and gonorrhea. Most people only get 1!

Speaker 2: You've got the hat trick! Whoo!

Speaker 0: And... And This feeding frenzy over subprime customers now includes big lenders like Santander and GM Financial. They have both expanded their subprime auto financing, and there are newer players like Scopus and Exeter who specialize in subprime lending. And you might be wondering, why the fuck is everyone in such a hurry to lend money to people with bad credit? I mean, sure, in the mortgage crisis, they were doing that so that they could bundle those high-interest loans together and sell them on Wall Street.

But there is absolutely no way that that is happening. That is happening again. That is exactly what is happening right now. And people have actually been worried about this for a while now.

Speaker 6: Is there a new bubble that's about to burst in the auto sector? Does this concern you at all, though, that it could possibly become a repeat of the home loan, boom.

Speaker 1: Do you see similarities between the housing crisis and what's going on now with used car loans?

Speaker 6: Is there concern now that there's gonna be another subprime crisis, except it's not gonna be mortgages, it's gonna be car loans?

Speaker 0: Yes, There is concern that this could be the subprime mortgage crisis, but with cars. And normally, if you add the phrase, but with cars, to any historical event, it sounds a lot more fun, like the assassination of Abraham Lincoln, but with cars. Sadly, This is the exception to that rule. Now, before you panic, experts say there are important differences here. Subprime auto loans are a much smaller part of the overall economy than subprime mortgages were.

So even if they do go bust, this wouldn't necessarily be the big short all over again, so much as the director video version with Brad Garrett instead of Brad Pitt, and instead of Ryan Gosling, an actual Gosling named Ryan. -♪ ♪ -♪ And Wall Street firms insist that they have learned their lesson and have set things up in such a way that tons of loans can default and investors will still be fine. But, there are trouble signs. For instance, standards for some of the loans being sold as investments can be shockingly lax.

Speaker 6: We've seen deals come to market with very low FICO scores and in some cases, no credit scores at all for the loans, which is amazing.

Speaker 1: So some people joke, you know, you really just need a pulse right now to get a, you know, subprime auto loan, so...

Speaker 0: -...ha-ha-ha-ha-ha-ha. -...ha-ha-ha-ha-ha-ha. That's a good joke. Solid set up, hard punch line, potentially devastating effect on the American economy. Top shelf comedy there.

It's the rule of 3 is what it is. And behind closed doors, some in the lending industry openly acknowledge conditions are deteriorating. In fact, when we sent hidden cameras to a debt buyers conference in Vegas a few months ago, we stumbled on Ken Shilson, the head of the National Alliance of Buy Here, Pay Here dealers. He sees trouble brewing because he thinks in attempting to keep pace with the big players who've entered the subprime industry, his own dealers have been forced to issue longer-term loans with less money down at higher cost to clients who are therefore at greater risk of default. And these broader lending trends are clearly terrible news for borrowers, but to hear him tell it, it's a great opportunity for those who buy bad debts and collect on them.

Speaker 12: These people have negative equity all the way through, and they're not gonna be able to hold their life together for 7 years. You know the customer. You know how to collab. You got the legal expertise. What's holding you back?

Speaker 5: Wow.

Speaker 0: That is both inspirational and profoundly upsetting. It's like if the song, I Believe I Can Fly, merged with the rest of R. Kelly's life. Now, listen, listen. The news, the news...

Don't Google that. Listen, the news, the news that used car dealers are predatory is clearly not new. But, It seems these days, market pressures are forcing them to be more aggressive and take more risks, to the point where we may be getting close to an industry that looks like this. ♪♪ Well, howdy there, folks! Do you need a car?

You can't afford a car? No problem, just come right on down today to Crazy Johnny's. Quick, quick, quick, quick, quick, quick, quick, quick. Crazy Johnny's. But don't take it from me, take it from my cousin, Crazy Jimmy!

Come on

Speaker 2: out here, Jimmy! Woo! Woo!

Speaker 0: Woo! Woo!

Speaker 2: Quick, quick, quick, quick,

Speaker 0: quick, quick, quick, quick, quick, quick, quick. Crazy Johnny's.

Speaker 5: Yo, Crazy Johnny! Ah! I love the smell of deals in the morning.

Speaker 0: I got a question for the people at home. Do you have bad credit? We don't care.

Speaker 5: Have you filed for bankruptcy?

Speaker 0: We don't care. Is your credit so bad that giving you a high-interest loan will basically trap you under a mountain's net, which there's no reasonable hope of escape? We don't give a... ...Fuck. And who

Speaker 5: you come in today, we've got a beautiful offer for you right

Speaker 0: now, man.

Speaker 5: This here is a pre-pre-pre-pre-pre-pre-pre-pre-owned 2003 Kia Optima!

Speaker 2: It's aggressively black.

Speaker 0: Jimmy, Jimmy, you got to tell the people what it comes with.

Speaker 5: I will it comes full of loaded with 4 tires up to 1 engine and a beeping device which emits a sound that will haunt your dreams.

Speaker 0: Does it come with anything else?

Speaker 5: It does, man. If you check the back seat, this car has a f***ing baby in it. Ba-ba-ba-ba-baby. There is an actual baby in this car right now! I have serious personal reservations about the situation this town

Speaker 0: is in! Don't focus on that. Look, this car is worth $2,000, but we'll let you have it for 0 down. And just $200 a month for the next 7 years.

Speaker 5: That's nearly $17,000! No, no, no, no, no, no.

Speaker 0: Nearly $17,000. No,

Speaker 5: no, no, no, no.

Speaker 0: No, no, no, no, don't do the actual math on that. Try and think of it at home like this. Act now, and this car will affect every financial decision you make for the best part of the next decade. And that is a crazy Johnny promise! Crazy, crazy, crazy, crazy, crazy, crazy, Johnny's!

Speaker 5: And the crazy thing is, this piece of shit car is actually an opportunity for Wall Street, too! But don't listen to me. Listen to our accountant, Crazy Walter. Come on out here, Walter!

Speaker 0: Come on out here, Walter!

Speaker 2: Come on out

Speaker 0: here, Walter! Walter

Speaker 2: is crazy. Come on out here, Walter! Come on, Walter! Come on, Walter! Beep, beep.

Speaker 1: Well, it's true. If you set aside the human misery this loan has the potential to cause as part of an over collateralized security this can be sold as a high yield investment.

Speaker 5: Damn, Walter! That has disturbing echoes of the mortgage crisis! Walter,

Speaker 0: this is crazy! The point is, it is so easy for us to get you in this car, why, it is almost criminal.

Speaker 5: It truly feels like it should be a criminal activity.

Speaker 0: And yet somehow, it isn't. That's our show. Thank you so much for joining us. Woo! Good night.

Woo! Woo!

Speaker 2: We don't care. We don't care.

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