How many of you would pay $400 a month for a Ford Ranger? How about $600 and change? Not you? I didn’t think so. But you would be surprised how many actually do. As a remarketing rep for Capital One, it was my job to deal with the failures—over 10,000 per year. Good people. Bad people. Mediocre people. It didn’t really matter in the end because none of them could make the sub-prime car payments. It’s a vicious cycle at the auctions. Retail cars are sold to wholesale buyers. These cars are then sold with cheap credit and inflated prices to an ever clueless public. Here’s today’s question: “What’s the alternative?”
It’s a tough question. First off, you have to deal with the fact that folks are simply going to do ‘what they want to do’ regardless of whether you or Dave Ramsey approve of it or not. You can shake your finger in self-righteous, sanctimonious anger at their ignorance but that’s a two way street. The beauty of this world is that you simply can’t know too much. Some smart alec always knows more than you. So with that in mind if you find someone in need of help, don’t just be the armchair lecturer. Teach them.
Even in the more extreme cases where the person may have impolite tendencies, you may really be helping their kids . . . or their parent . . . or that poor car . . . or the girlfriend. I find most folks become curious about their cars (and you) once they realize that a few moments of cursory inspection can keep them from spending hundreds of dollars at the dealership.
A second area I would consider is taxing the dangerous and irresponsible. Wait. Put the gun down. I’m NOT saying we need more taxes. Although we definitely should be spending less by electing tightwads! Just front-load the usual taxes for the irresponsible by making registrations expensive for them. Where would I draw that green line? At-fault accidents. If the car is totaled and they break the law, they pay an additional penalty based on the severity of the behavior. The more severe the crime, the greater the cost of registering their next ride.
Related to this is insurance. Better have it. Period. Without it the car should be impounded by the police or repossessed by the lien holder. No excuses. Unfortunately some states still allow the uninsured to penalize everyone else. In my world it would be the opposite way around.
Finally I would give a tax holiday for the keeper and eliminate bogus fees at the dealerships. If you keep a car for over 10 years AND 100k, congrats. You get to enjoy the fruits of good ownership. Proceed to the nearest Hawaiian cruise. Everyone else gets to suffer the car buying experience without having to endure a $149 documentation fee that really involves an actual cost of $20.
Would this solve the problem that comes from wasted assets and wasteful spending? Not at all. But it would make the costs of ignorance far more expensive for the worst offenders. In the end I believe banning should only take place in extreme circumstances. For everyone in between, you minimize bad behaviors by making it cost prohibitive.
I make my living collecting from uninsured drivers who cause accidents. In my state (Indiana) insurance is required, but there is no penalty for non-compliance so long as you are not caught. Even then, you will not get your car impounded and can continue to register it, lying about your insurance every time.
Most cases are not scofflaws, but people who are struggling to raise 2 kids on an $8/hr job and who value rent, utilities and gasoline (and possibly beer and cigarettes) higher than insurance. Nobody expects to have an accident today. These same people are often making payments on a 96 Caravan or a 98 Malibu.
Keeping to cars and not politics, cars are getting priced out of these people’s budgets. Try to think of what you can buy for $2000 today. Most of them are a mechanics nightmare. Name a 12 year old minivan that is worth a damn and will not cost you thousands to own for the next 3 years. It seems that old Chevy and Ford pickups are the vehicles of choice of the lowest incomes in the midwest. Durable and cheap to fix. All of the equipment put in for safety and environmental reasons have been good things on balance, but they are pricing cars out of reach for the lowest rung of the ladder.
Maybe the people who can’t afford to drive…shouldn’t drive.
Arturo1855:
With 500K folks a month in the US being laid off, most of these folks won’t have a place to drive to.
Problem solved….
Required Insurance? Your argument for it sounds amazingly like the the current Health Insurance Debate. There are many parallels.
Wow. I feel kind of like if this were an essay in a collection, the next one would be by James Howard Kunstler. Sort of a point-counterpoint thing. He would use your points as evidence of the end of the era of happy motoring. Sort of an End of Suburbia thing.
When you’re poor, paying a lot for necessary infrastructure really sucks.
A few years back, there was an idea floating around to remove the requirement for mandatory insurance and replace it with an insurance tax on gasoline. Everyone would be covered by minimum coverage and additional coverage would be purchased a-la-carte from traditional insurance companies.
Maybe the people who can’t afford to drive…shouldn’t drive.
What other solutions would you suggest to people that have no choice? The most affordable housing is often further away from where the jobs are, forcing people to make the choice of either being “house poor” or driving several miles to work. There are also construction jobs with jobsites that vary month to month, how would you suggest the people with those types of jobs get to work? Move around with the jobsite? Suggesting that lower income people just not drive is a ridiculous idea.
I agree with jpcavanaugh, there are an awful lot of good, hard working people out there that have a hard time affording a decent car, but have no choice if they want to make a living. I have a lot more respect for the person that tries to do it the right way than I do for the people that just don’t even try and sit at home living on checks from the government.
What other solutions would you suggest to people that have no choice?
The bus!
On the first point, they are lost. You need car in USA, the country was built that way, and nobody is gonna rebuild it anytime soon, if you are poor you are just not gonna making it. Cars are not cheap.
Second point, many opponents to regulations and government protections oppose until they get hit. Then they see the light.
Whatever it is. Death penalty opposers’ kid is murdered, change of heart. Go seek vengeance. I know I would.
Letting the poor drive illegally is less fun after a drunk whacks you without insurance. Yes, take them off road into the cruiser on first identification and impound the vehicle.
Opposing socialized medicine is fine until your parents go on medicare, then you slip into complete ignorance on the topic or maybe get the clue.
Red light cameras (not set short on purpose), and speed cameras (not speed traps), OK, get hit and see how you feel. I watch red light runners every day and give it 2 seconds at any green, looking both ways at every light. They run right through without tapping brakes.
Some things should not be “for profit” and “by choice” in an actual civilization. Others should.
Private insurance is semi-socialized medicine open only to the affluent who then pay for the poor anyway via emergency rooms, and the affluent are victimized by rejected claims and policies anyway.
You have to look at the whole picture to get it.
Political rant over.
Before Speeding Tickets, here in NY I did personal injury cases for a few years.
In NY, Insurance companies must update DMV with plate numbers. DMV NY assumes any car with a plate but without insurance is being used. You then get hit with huge fines and such…and your license is suspended the amount of time the car was on the road uninsured. There is a one time 90 day amnesty with a fine.
You’d occasionally see an uninsured vehicle, but not too often.
I agree that as a principle, you should not be forced to buy insurance, but in reality, lots of folks are “judgement proof” (terminally poor) and they will be out there…in the 12 year old bald tired-dead shocks minivan. It is raining and they are slighly drunk, and about to blow the intersection you are approaching.
I’m amazed that other states have no enforcement mechanism than “wait till you are pulled over”.
The insurance companies play this by supporting very low mandatory insurance amounts. They then take the “assigned risks” (the non voluntary market) and put them out there for only the minimum amount. The Premiums are not low, and monthly payments are part of the deal. There are a host of scummy insurance companies (not the ones you have heard of, save Allstate) which play this market, know every game, and are a bitch to collect against.
The worst drivers are out there with only minimum insurance.
“Maybe the people who can’t afford to drive…shouldn’t drive.”
And, maybe people who can’t afford to live shouldn’t live.
What other solutions would you suggest to people that have no choice?
The bus!
That’s a great idea, I’m sure there are bus routes all over desolate areas like west Texas and the rural midwest. WTF? This country was not built for mass transit, and it’s expensive to live in the city. I know a city apartment here is way more than double what one in the ‘burbs costs. When you move out past the suburbs it gets even cheaper. But no bus routes.
“What other solutions would you suggest to people that have no choice?
The bus!”
This works fine if you live on a bus route and your job is on the bus route. And the grocery store is on the bus route…or next door to you or to your job.
A typical response from a city resident who thinks everyone is a city resident. N/A for about eighty percent or so of US residents.
More simple solutions from simple people and the resulting super problems.
The solutions?
Walk, bus, carpool, vanpool, contacting a non-profit, contacting a church (if they attend one), friends, family, associates, paying someone to drive you, asking your employer, local taxi services.
Then you have the other side of the equation… educating yourself.
Friends, associates, attending car shows, internet, library, church, taking a course, borrowing a wrench set at a parts store, finding someone there and simply ask questions.
I will give the fact that insurance is not cheap, and the employment situation these days is not good. But that doesn’t mean a person can’t develop their skills and pursue solutions that would eventually free them from the financial servitude.
You have to find these things. But they are out there.
The problem with these solutions is that they will not always work in the real world. Those who drive recklessly and cause accidents may not have issues with finding ways around the law and not paying the higher fees. As for way around the transportation issue, it will be difficult. Even living in NYC, buses and trains are less frequent then they used to be. For those working many hours to pay for the basic necessities, how are you supposed to leave work, pick up the kids, and stop to get dinner on a bus? In the same way that there are services for subsized housing and job programs, transport needs to be subsudized. In some of the more poor neighborhoods in NYC, “dollar van” services are available from those trying to make a few extra dollars with vehicles. This is not a bad model for subsidized transport in many places. I think though, low cost transport is the answer. Is a newer microcar not meeting federal crash standards less safe than the 12 yr old ride that most of these people are driving? Would a Tata Nano be worth condering for those people?
It has been estimated that in Chicago 25% of drivers have no insurance. Even worse is the # of bicyclists are increasing and _ALSO_ don’t have insurance (and ignore the law 90% of the time anyway.)
People need to realize THERE IS NO FREE LUNCH. THERE SHOULDN’T BE A FREE LUNCH (on vehicle transportation).
You either have & maintain a car & have cheap rent way out in suburbia, or you live in the city & take public transport.
My apartment 7 miles from work & 5 miles from downtown — next to multiple bus & train lines, that is 4 br 2 bath is $1500/mo + utilities. You can probably get a HOUSE rental for that 50 miles outside of Chicago (maybe north chicago, waukegan, etc) — possibly even cheaper.
I just purchased a house 40 miles out that is next to metra ($6 to downtown 1 way, $4.50 to my current job) so if worse comes to worse and I can’t afford a car/motorcycle, I can take public transport.
Cities further out have this option as well, as I think metra even goes up to Wisconsin.
If you are working construction in Chicago you should EASILY be able to afford a beater van+ insurance at $30+/hr.
Even if you are poor you can live in the city here in a decent neighborhood at $700-$800/month +utils included in a 1 br apartment with street parking.
My loan repayment + property taxes is only slightly more than my rent. Utilities of course will be more due to the extra 1000 ft^2 I have to cool/heat, but this is easily changeable with a smaller house (houses in my area start in the 140’s).
@superbadd75
You asked, I answered… with a reasonable alternative that many could use (and you didn’t mention in your post).
It is worth noting that the vast majority of people in America live in urban areas so a bus likely would/could work. It is just not as convenient and so to drive a POS with no insurance and potentially cause others harm is “easier”. But if someone chooses to live in a remote or rural situation, a bus is probably not a good choice. But then again, they would have known that when they CHOSE to live in such a situation!
We are responsible for the decisions we make, regardless of what the politicians seem to be doing these days with irresponsible corporations.
@fincar1
According to the latest US census figures, 79% of Americans live in an Urban area, not the other way around as you imply. God forbid someone would have to walk 2 or 3 blocks to catch a bus! Facts can be frightening sometimes…
http://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo_id=01000US&-_box_head_nbr=GCT-P1&-ds_name=DEC_2000_SF1_U&-format=US-1
jpcavanaugh,
i gotta say you’re wrong.
when you make $8/hr, even a cheap car is a major critical expense. fine, that sucks. but you CAN buy cars for under $1500 that can provide a year or two or reliable service. and you don’t need to be some sort of car guru to do it, or even do your own work/maintenance.
but its your responsibility to educate yourself. its amazing to me the extent that people in general are clueless about cars. its your second biggest expense after housing, and its by far the most likely to kill you.
it doesn’t take much to learn how to figure a cars approximate value, check for accident damage, do basic mechanical lookover, and what to look for in a test drive. basic “good citizen” crap.
ive worked at a $9/hr job with people for whom its a career. its jaw-dropping the stuff they do, and the amounts they pay. we’re talking buying a 15 year-old 150,000 mile plymouth, sight unseen from a dealer ($1200). transmission is demolished? you bet, time to max out another credit card to fix it. insurance? ha! only if its required by the financing company…
People buying things they can’t afford is the heart of this problem. Flat screens, iPhones, clothing, cars, drugs, etc.
If you’re not making enough money, change your situation. Get help, charity, education, whatever it takes….
But do not put the public at risk because you simply have to have what you want when you want it.
I paid exactly $80 a month for my Ranger. Then I paid it off after making payments for about a year.
This debate is interesting. As one living in a rural area, we do have public transport…sort of. It’s a Welfare-type program that advertises service to anyone but they give “first priority” to the sick, disabled and poor. Nothing wrong with that, it just limits the possibility of guys like me using them. The perk is they will come to your home in a Ford Econoline (or similar) and pick you up, then take you wherever you want to go (within reason). No set stops.
I think if this service got regular funding from local sales and property taxes instead of scrimping by between the occasional government aid grants they get from Washington D.C., they could probably offer a more regular, fixed-route service for those of us who aren’t infirm.
Better public transit options. You know, there’s a suburb near where I grew up, called Niles. I’m not going to say it’s a good place to live, or a bad place to live, but I do know this: they have something called the Niles Free Bus. It’s two routes that wend small buses in two directions every day during extended hours, and when I wanted to go visit friends there when my car was broken down I’d just ride my bike to the first Free Bus stop and get on. As an adult, that service’s existence is a good reminder that even in a sprawling suburb there are reasonable ways to do public transit.
Most people that can’t afford cars don’t want them; they want to be able to get by without them. Hell, I make six figures and it >kills< me that I can’t get the four miles to and from work and the four miles to and from my kids’ daycare on public transit in less than a couple of hours; we’d be able to give up our second car.
The roads are a shared resource, and everyone on them should be required to demonstrate the financial ability to deal with the consequences of accidents if they cause one. Requiring either proof of insurance or proof of sufficient net worth to cover the potential costs of error is a very reasonable legal requirement.
At-fault Accidents. If the car is totaled and they break the law, they pay an additional penalty based on the severity of the behavior.
That would be a great way of increasing the number of hit-and-run accidents, because you’re dramatically increased the incentive to flee the scene. Not a great idea, particularly if you’re concerned about how accidents get paid for.
Related to this is insurance. Better have it. Period. Without it the car should be impounded by the police or repossessed by the lienholder.
A complex non-solution to a simple problem. Here’s a much easier solution: Collect the cost of third-party liability insurance through a combination of the gas tax and registration fees. There’s no expense related to enforcement if everyone has insurance once they’ve figured out how to work a nozzle.
Those who want comprehensive coverage can get private insurance on their own. They won’t need uninsured motorist coverage, because everyone will have insurance.
@pch101
We already see the hit and runs with DUIs. My son was hit, but managed to recover and track the guy long enough to get description and plates. Guy’s insurance company couldn’t have been nicer….wonder why? Couldn’t prove it was DUI by the time the cops caught up to him the next day, but that was their take on a 1 AM Saturday hit and run when they met up with my son at the scene.
The NY solution of requiring FS-1 proof of insurance is a good idea and was duplicated in my state, RI, but long after NY had it in place. No need to collect insurance at the pumps, which in RI at least would be subject to massive government abuse through corruption and inefficiency and skimming for other pet projects.
re: buses and other public transportation
RI population density is >1000 per sq mile. Urban, right? Here’s my bus trip to get from home to office: 1)get 3 miles by other means to bus stop, 2)catch bus for central location – about 30 miles, 20 miles beyond my office, 3)wait, 4) transfer to another bus and ride 20 miles back, 5)last mile to office by other means. Elapsed time assuming no wait – about 1 hour. Total door to door commute distance – 12 miles and commute time 20 minutes by nasty old car.
Ralph SS : “Maybe the people who can’t afford to drive…shouldn’t drive.”
And, maybe people who can’t afford to live shouldn’t live.
I agree with you on both points, Ralph!
This column blog used to be about semi interesting auction (Hammertime?) or used car stories. Seems lately it is either a reincarnation of “Which 5 brands would you keep” game or some class warfare diatribe.
What does “Good people. Bad people. Mediocre people” mean exactly? Relative to their credit scores, or attitudes when faced with repossesions?
I’m assuming if they were financed with Cap1, they were all generally in a lower credit score tier. This is more of the same bankster nonsense about how all sub prime these people are scammers and are bad people. And the banks and tthe banksters are angels of mercy. Please.
I for one do not point the sanctimonious finger at anyone other than the banking oligarchs. Without knowing sales details, getting a Ranger to $600 a month is done by either loading it up with every conceivable option, and financing it with crappy rates, or more probably, rolling in the upside down value of the trade, financing the doc fees and sales taxes (as is all too common), and then doing it with crappy inteest rates. Now last time I checked, it was the Cap1’s and Countrywides of this country that wrote these bullshit loans.
Speaking of the former employer, I regularly see their cars at auction, 7,8,9 years old, repossesed. Now come on, what self respecting, upstanding, righteous financial institution writes a loan on a car this old? Same with HSBC, Infiniti/Nissan and the rest.
I wouldn’t crow too much about the ripoff #149 DOC fee, when the auctions take more for doing much less. Pay someone 8 bucks an hour to drive the car thru the lane and some bafoon yakkity yakking his stuttering nonsense into a microphone. That’s worth more like 20 bucks not $250.
The public isnt at all clueless about these fees and such. Most of these type of things have been publisized ad naseum. Same for the crap they try to load into a mortgage or property sales. But just try to pull a Clark Howard and insist they remove it. Table for one please?
Trying to understand the point of this article it sounds like the author is promoting some sort of financial IQ test before buying a car. How bout houses? We should tried that one bout 5 years ag ago. How bout before having kids? I know some people who would get turned down. But I notice not much mention of decency tests for sub prime financial institutions like CAP1 and Countrywide, sub prime employers like Walmart, and others.
What’s in your wallet?
Countryboy, in the words of the late Frank Zappa,
“May your shit come to life and kiss you!”
Then again, I’m sure that would simply add mass to what’s already in your head.