Reply #37: Those loans are way different than typical car-loans

[LynneSin]

We have those places here in Delaware too. They do 'pay-as-you-go' loans where the rate is outrageous and you pay directly to the dealership, sometimes the payments are weekly to ensure the owner keeps up on their payment.

And what's worse, they sell them bad cars.

About 3 months ago I was in need of a replacement car. My car was totalled and I had no desire to have car payments or depleting my bank account so used cars was the way to go for me. But finding what I wanted was difficult to do so as a lark I opted to stop at one of those 'pay-as-you-go' sites. I figured if I was paying cash the guy isn't going to argue about it. (which to be fair - he didn't care).

But before he knew about my cash situation he asked me some questions. "How was my Credit", "How much can you afford each week". I explained I had excellent credit and I was paying cash. I was here to look at some cars I saw on his lot that interested me (He had some VWs). As we walked to those cars we passed some junkers and he pointed at them and said "Oh you wouldn't want those, those are for our bad credit customers".

I just wanted to leave. The guy and his business creeped me out.

In a nutshell, for him if you had bad credit he'd finance you with a car that was probably worth $500 trade-in if you're lucky. For him, if you defaulted he didn't lose anything except a piece of junk car.