Tag Archives: subprime financing

Really Bad Radio Finance Ads

On my recent trip to Florida, I got to listen to the radio for a few days while driving around. It made me wonder if you can’t tell a lot about the culture of a place by their radio ads. Florida certainly has the great weather, but they aren’t doing that well economically. The state was hit badly in the mortgage meltdown, still has pretty high unemployment, and millions of not so well off residents. But they still want stuff beyond what their wallet and income can afford. So you tell me what it says about their financial state when these where the most common radio ads:

I went bankrupt, cash is tight, and I need Jesus to help my credit. But I got a new car with 96 cents down at 1-800 new ride. Yes, we have lots of this so-called subprime financing here, too. Just look in the back section of any Sun newspaper. You’ll be paying 25 to 30% interest and the fees will be $1,000 to $2,000. It is massively profitable for the dealer and there are lots of people who’ll pay whatever the price is to get a new vehicle. If that’s you – don’t. Send me an email as there are alternatives. Once you’ve signed for a 30% car loan you’re doomed for years, with no hope of trading or getting out of the trap.

Want new wheels and rims? First week special of only $20 gets you the choice of any rims and wheels! Go to rentawheel.com for the location near you. Yes, renting tires happens. At $40 a week and up, people with no money can make their ride look cool at annualized interest rates that make payday lenders blush.

When you’re in an accident, call the police, call a tow truck, and call us right from the scene of your accident at 1-800-411 pain. Yes, a lawyers ad for car accident victims. They’re not promoting their competence – they just want to be first to be called. After all, the US is a very litigious society and millions of people would just love the free money from a lawsuit, even if it takes 30 to 50% fees to the lawyer.

One of the stupidest ad lines I’ve ever heard: “Investing in gold and silver is the new savings account.” Hmm…let me think: A savings account may get a bad rate of half a percent or so, but there’s never been a savings account that’s actually lost money. Gold goes on a monthly roller coaster and is down about 40% in the last year. Adjusted for inflation, it’s not even close to being back to what it was in the early 1980s! Yet, these ads somehow makes you think it’s the place you should put your savings? That has to be the most insane idea I’ve ever heard…news flash: As of today, gold is barely over $1000 an ounce..buy at $1800 and take a 40% loss on your so-called “savings?”

Happy New Year – For Some More than Others

Next year, a bunch of businesses, including American Express are going to be reinvented as banks. GMAC, the ex finance arm of General Motors, just made it yesterday. No, of course they’re not a bank. It’s just a neat way of getting in on the bailout money!

This was a hugely profitable company until they took stupid pills and got into sub prime mortgages in a huge way through their mortgage division Ditek.com that you see advertising on TV all the time. Two years ago, they made billions of dollars, last year they lost about $8 billion and now finance only about 2% of GM vehicle sales. How sad…but it was either deal with it, or get a bailout. I know I’d pick the free $6 billion…

In the U.S., the car loans 60-days in arrears is up 17% for the 3rd quarter. That just came out – and that pain will continue to worsen. If people can’t pay their current car loans there isn’t going to be any relief for the Little Three formerly known as the Big 3.

For the coming year in Canada, get ready for a ton more marketing of prepaid Visa and Mastercards. They’ll make the same profit, along with an administration fee, and have no chance of delinquency. After all, you can’t go in arrears if it’s all pre-paid. But right now they’re all freaked out since their internal rules require expiry dates and a number of provinces have outlawed that rip off.

Did you get any gift cards for Christmas? In our family there were none – OK, other than Tim Horton but if they go under we can likely shut down the whole country.

If you did, get out there and use them. The sooner, the better. It’s a real crap shoot if that merchant or restaurant will still be in business to honour the card and that isn’t worth the risk. Last week, a U.S. report showed that an estimated 148,000 retail businesses will go under in 2009. Someone paid real cash for that gift card but until you use it up, all you’ve got is an I.O.U.

Here’s one more prediction for 2009: As the economy gets worse, there’s a business that’s up 30% as a result: It’s on-line psychics. Yes, for about two to four bucks a minute, or $100 an hour, psychics are doing very well predicting your financial future on-line.

I’m going to do that free for you. Think of it as your late Christmas present: One on-line psychic was quoted as saying he tells people (that’s code words for: he tells everyone the same thing) your finances really won’t improve until about the middle of next year.

Now aren’t you glad you didn’t have to get on the computer to get that?

Have a happy New Year and we’ll talk about the “real” New Years resolutions in the coming weeks. You and I both know that today is not the day for any resolutions which will survive beyond a week or two…