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Deals from Hell

by metavision Sat Jul 12th, 2008 at 03:12:25 AM EST

This started as a comment that grew snarkier --being home with a fever at this time of year-- and became a rant about the supreme subprimers.

During the last protest march, I saw a real estate office (Fincas Corral) where the biggest sign on the window said simply "120%".  And it wasn´t quite the interest rate, if you get my drift.  Some developers were so panicked at their expo this winter, that they offered a free car if you purchased a ´home´.  An actual, permanent asset, like land, was not necessarily included though.

Little shop of horrors... Diary rescue by Migeru


I haven´t paid attention to mortgage deals, but today, I couldn´t ignore some consumer ads from BBVA that I have no words for:

The Honda you like best with an exceptional discount and the first
12 payments without interest, only for being a client of BBVA.

Honda CR-V 2.2 i-CTDi Elegance
€2,484 discount for BBVA clients
12 payments of €238.05/mo +
108 payments of €341. 40/mo  

(in absolutely tiny, fine, print)
8.50%
Total cost €28,566  
Total amount financed €39,842.06  
Opening commission 0,4% (€114.26)
APR 7.02%

Honda Civic 2.2 i-CTDi Sport
€2,754 discount for BBVA clients
12 payments of €168.30/mo +
108 payments of €241.37/mo

(in absolutely tiny, fine, print)
8.50%
Total cost €20,196  
Total amount financed €28,168.34  
Opening commission 0,4% (€80.78)
APR 7.02%

I guess I do, have words, since I have written it all out.

If Jerome is correct and even if the car is worth repairing in 10 years, it will be an unsalvageable asset in much less than that:  The adequate depreciation method for these items has not been invented yet.  Or maybe that´s last century accounting, I don´t know anymore.

When I think of those numbers and add the endless hours of misery and stress it costs, plus parking, insurance, maintenance, parking fines, tires and fees, I don´t even need to consider the price of ´petrol´.

My Feet, LLP!

I´d like to know what consumer loan terms are in China and India by comparison.  It would be nice if they were wiser and considered ´value´ in the traditional style, instead of ´price´, but I maybe dreaming.

Any comparably progressive, ethical and transparent ads from major banks in your country?  I wonder what ´the usurers´ are doing!  Bet me what bank will be the first to give cars away, like toasters, for opening an account.  Bet me the year.

Check your sources, find your favorite subprime institution and let´s hear the global worst.

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There's a pretty bad one in Sweden at the moment. It goes under the headline of "Microloan" and lets you borrow 3000 Swedish crowns for a month. For "only" 375 crowns, or an annual interest the next best thing to 311 % if you include compound interest (or 150 % if you don't).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 16th, 2008 at 02:34:31 PM EST
Oh, yeah!  Forgot those sweet ´finance companies´ that advertise on tv and sponsor cycling teams and even the number to call costs porno rates.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Mon Jun 16th, 2008 at 02:50:24 PM EST
[ Parent ]
... they get around quoted effective annual interest after compounding by offering the short term loan, then when the person shows up and asks for more time because they cannot pay it off, re-loan with the interest due rolled over into the new principle.

Add in that they headline the interest over the period rather than the annual interest rate, and the compounding on the annual interest rate makes a traditional pawn shop look like a bargain.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 16th, 2008 at 05:31:52 PM EST
[ Parent ]

the compounding on the annual interest rate makes a traditional pawn shop look like a bargain.

I'm so much a fan of how this civilization has evolved.  I can remember when pawn shops were considered "last resort."

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Mon Jun 16th, 2008 at 07:17:25 PM EST
[ Parent ]
... I can remember using a pawn shop as a last resort in Australia ... and from that experience the difference between extortionary simple interest and extortionary roll-over interest is, I would say, a substantial one.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Jun 17th, 2008 at 02:45:47 PM EST
[ Parent ]
Slightly OT - hope you get well fast and take care!
by Fran on Mon Jun 16th, 2008 at 03:49:42 PM EST
I saw another one just a few hours ago. I don't remember the exact wording, but the general gist of the ad was "borrow money against your old gold."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jun 16th, 2008 at 04:28:10 PM EST
The deals are getting ridiculously interesting:

Still a paradise for some, or we all deserve a hell nevertheless? (For a video, scroll down here).

Washington Times has a three-part series and a timeline of the greatest boom and bust folly.

For a daily portion of mind-blowing reading, you can just visit specialized blogs like Calculated Risk. No need for bestselling thrillers.

by das monde on Mon Jun 16th, 2008 at 07:54:34 PM EST
That's really precious.  Sounds like another blue- light special at KMart!  Two ugly boxes for the price of one (and you even get enough space to hide your RV because you can´t sell it and can´t afford to use it?)

Royal
Gated
Estate
Luxurious
with pools
and RV garages
...
Designer Features.

Is it possible somebody will still fall for that?  It doesn´t say anything about financing, so it must be nearly impossible to get a mortgage and therefore nobody may get the deal.

Whereabouts are you now, das monde?  Any idea about east Europe, or the Far East?

LOL video:  "Michael is taking a hit..."??

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Tue Jun 17th, 2008 at 03:08:02 AM EST
[ Parent ]
The promotion is extended until June 30. The deal might be a reasonable one for some segment that can't wait; the price tag must be outdating soon, even for two "properties".

I live in Japan, but now I am in Hong Kong for two weeks. (Tropic rains.) I plan to be in Europe in September.

by das monde on Tue Jun 17th, 2008 at 06:48:50 AM EST
[ Parent ]
Hey!  I hope we both make it to the meet-up in Paris.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Tue Jun 17th, 2008 at 02:09:38 PM EST
[ Parent ]
I'll see how much time I have. The weekend of 26-28 September would be more fitting me, from today's perspective.
by das monde on Wed Jun 18th, 2008 at 09:27:52 AM EST
[ Parent ]
of one!  

Such a deal!  

Why be once stuck when you can be twice stuck?  

The Fates are kind.

by Gaianne on Tue Jun 17th, 2008 at 04:02:11 PM EST
[ Parent ]
They bet we are stupid.

they normally win.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Jun 17th, 2008 at 01:29:10 PM EST


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