John Oliver is back at it with a new piece for HBO’s Last Week Tonight aired on Sunday. This time, the comedian addressed the subject of auto lending, and how car dealerships are causing financial ruin to citizens with the “buy here, pay here” model.
By acting as both the bank and the vehicle provider, auto lenders allow low-income customers to get a sub-prime car loan without the necessity of credit background check.
However, John Oliver exposed darker side of this business practice, as some of this loans come with exorbitant interests rates, forcing the owners to stop paying their monthly fees, and subsequently enabling dealers to repossess the vehicles multiple times.
The dangerous downside of auto lending
John Oliver started the segment by showing a car commercial offering the “buy here pay here” plan. The ad promises sub-prime deals to potential buyers including no credit check and even the option to trade former vehicles for more recent models.
Although Mr.Oliver gave props to some of these businesses for helping low-incomers get to their workplaces with less effort, he soon followed by telling the story of Aileen Jones, a former customer of an auto lender who ended with a $13,000 loan debt from a $3,000 car due to the sub-prime’s high-interest rates.
These rates average between 19% to 29%, according to the comedian.
Repossessed cars are a strong income source
The former Daily Show anchor also made some remarks about negligent car repossessions. He cited one case where a dealership recovered a woman’s vehicle while she was picking up her children at the daycare. The employees took the car back without noticing an infant seated in the backseat.
Car repossessions happen when the customer can no longer pay a loan, this often results in auto lenders selling the same vehicle numerous times. Mr.Oliver and his research team followed a story by the Los Angeles Times about a 2003 Kia Olimpic that was sold and repossessed at least eight times in three years.
John Oliver ended the show with surprise guests
The segment finished with John Oliver doing a parody of a car commercial with the help of Keegan Michael-Key, a fellow comedian mostly known for his different characters on Comedy Central’s “Key and Peele.” Both of them posed as dealership owners and mocked sub-prime loaners. The sketch followed a second surprise appearance as actor and producer Bob Balaban entered the stage to join the comedians. Mr. Balaban gained notoriety when he starred as the NBC president in the fourth season of “Seinfeld”.
John Oliver warned the audience about sub-prime loans, reminding that this type of business practices was the primary reason for the mortgage crisis of 2007. Last Week Tonight airs Sundays at 11 pm on HBO.
Source: HBO