Then one day it wasn’t reliable, and I was stuck on the highway with no way to pick up my son at Boy Scouts. Sometime later, I ended up at a  “Buy Here, Pay Here” dealership where, for very little money down, and a long-term payment plan, I was able to drive home in what seemed to be a good, affordable used car.

Several months later, when I was one day late on a payment, that car was repossessed from my driveway.

Eighty-five percent of all workers depend on a car to get to work, and for many people, it is a necessity, not a luxury. A new car purchase may be out of reach for many low-income workers.

However, predatory car dealerships are there to take your money and take back the car if you are, as I found out, one day late on your payments.

Millions of Americans who have unstable credit, or no credit at all, are forced to turn to high interest auto loans and hefty fees to buy a car.

Fraud across the banking industry and easy access to credit led to the housing industry’s demise more than a decade ago, but lenders never turned off the spigot for auto lending. Scam artists are using the same shady tactics that caused millions of people to lose their homes to sell used cars.

Once the recovery from the housing crash started, the financial industry shifted its target to bad and low-credit buyers, and in turn, car sales picked up. The focus on subprime auto lending brought record sales across the car industry. Now Americans hold more than $1.24 trillion in auto loan debt.

These car dealers don’t care if you have bad credit, no credit, a history of foreclosure or bankruptcy, or previous repossessions. In fact, they target people with a history like that! It means that the likelihood of repossession is higher, and they can re-sell that same car to someone else.

If you purchase a used car with a high-interest loan, you are likely to pay between 18 and 35 percent interest. And what makes the monthly payments affordable is the fact that they stretch the loan out over a long period of time. That in turn increases the final cost of the car. It’s possible that you could ultimately pay $13,000 for a car that originally cost $3,000. And that’s just over three years.

Many of these lenders pursue people long after their cars have been repossessed - it has been reported that over 35 percent of all sub-prime financed cars are repossessed. And you are still liable for the debt, even though the car is gone.

The default rate on this type of loan is typically one in three within seven months of the original purchase. That means one in three people who enter into these kinds of loans will have their car repossessed. Dealers and lenders argue that the high-interest, long-term transactions accounts for the risk they’re taking in financing a low-credit buyer.

This kind of predatory lending is why it is often said that it is expensive to be poor. Everything costs more when you need it quickly. When you get what looks like a check in the mail for a large amount, telling you that you can apply that check to a used car, you may be tempted. When those loud television ads tell you that you can purchase a good used car even if you have no income – throw out that offer and turn off that television!!

When purchasing a car, take your time, look around, and talk to your bank or credit union to see if you qualify for a reasonable loan. Ask a relative or friend with better credit if they would co-sign on a loan, but don’t give in to the immediate temptation of getting something for very little. Saving for large purchases, whether cars or furniture, is always better and safer.

Connecticut law requires dealers to inform you when a vehicle is sold “as is.” They must also allow you or a mechanic of your choice to inspect a used car before you buy it. If the dealer promises to make repairs or correct conditions on the used car prior to purchase, they must provide you that in clear language in the sales contract.

For more information on buying a used car and information about our Lemon Law program:

https://portal.ct.gov/DCP/Common-Elements/Consumer-Facts-and-Contacts/Automobile-Dealers

https://portal.ct.gov/AG/Consumer-Issues/Auto-Issues/Buying-a-Used-Car

DCP.LemonLaw@ct.gov

As always, pass it on, talk to friends and family and remember to take your time when making large purchases!

This article was written by Catherine Blinder, chief education and outreach officer of the Department of Consumer Protection of the State of Connecticut. To learn more about how the Department of Consumer Protection can help, visit us at www.ct.gov/dcp.