According to the show, the majority of buy-here-pay-here dealerships take advantage of unknowing buyers by providing them with interest rates that average between 19 and 29 percent. These vehicles are also being bought at approximately two to three times Kelley Blue Book's listed value. With these two statistics, it shouldn't come as a surprise that nearly a third of sub-prime loans default in an average of seven months.
The show even managed to track down a 2003 Kia Optima that was originally sold by a Kansas City-based buy-here-pay-here dealership that had a KBB value of $5,350 and was sold for roughly $11,000 in 2008. The Optima was then repossessed or returned to a dealership and resold eight times over a three-year period. Each time, the vehicle was sold at a price of roughly double or triple its KBB value.
If the Optima's history sounds familiar, that's because it's similar to what happened with subprime home loans in 2007 that led to the house market crash. Oliver believes that the same situation could occur in the automotive segment as companies are now selling high-interest subprime loans on Wall Street.
While that's unlikely, these type of practices ruin peoples' lives and needs to come to a stop.