“Subprime auto lending” isn’t one of the phrases you’ll see in sticker form, slapped onto the glass of a “buy here, pay here” location as a beacon to anyone who might not otherwise be approved for an auto loan. That’s because it would probably derail or at least hinder that part of the loan business, which hawks its used/preowned goods as one of the answers to the working poor’s problems. With no real approval criteria in place, anyone can get their hands on the car they need to get to work. But Last Week Tonight recently explored just how short-lived those solutions are, and whether they constitute the makings of a sequel to The Big Short.
As John Oliver notes, these dealer/lender hybrids get people with bad or no credit into cars with the same frequency as they repossess those same cars from said people. At the rate that these subprime lenders reclaim the cars for nonpayment, they’re essentially renting these cars out, not selling them. The sky-high interest rates and payments are impossible for most borrowers to keep up with, which is how one Kia model—a cursed one, if you believe Oliver—ended up being changing ownership eight times in just a couple of years.
Many people are defaulting on these loans, which is an exciting development for those in the debt-buying business, of course, but it does raise the specter of the subprime mortgage crisis that led to billion-dollar bank bailouts and Adam McKay’s delightful satire. But, even if it does burst, the subprime auto loans bubble isn’t likely to have the same impact on the economy, which is why Oliver describes it as a “direct-to-video sequel” to The Big Short. Then he gets Keegan-Michael Key and Bob Balaban to join him in a car-commercial parody that sneaks a little terrifying truth into its advertising.