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The Second Hand Car – Credit Card Sharks and the Ordinary Consumer

By Andrew Klein

Light reading from a rather miffed old fart

Buying a car is an expensive challenge at the best of times. These days one can use the internet to go forth and find a vehicle that is within the price range planned. Not that I am fond of wasting money on cars but there is a time in one’s life where the body says; “It’s time that you find some way of getting around without having to borrow your sister’s car, and given the pounding your body has had … difficult to access public transport and the cost of taxis and a desire to get around … well … Its time.“

So there I was. Looking for something in my price range and second-hand, a car that reflected many of my own character traits. Living within my price range and very much second hand at my age.

Now, dealers of used cars can be fun. We are all familiar with the jokes and the stories that are told about this particular trade. So here is my contribution to the adventures of buying a second-hand car.

The only reason I am sharing this one is because it was not just funny but maybe a sign of the times.

I had made an effort to save money for some time to be able to pay cash for my future means of transport. Call me old fashioned, but I don’t want to borrow money at high interest rates and be at the mercy of one or other finance company. The other reason being is that I don’t have a credit rating. I have never been bankrupt, always paid my bills and am financially secure. I have never had a credit card, preferring to save my cash and then make a purchase. This of course does not apply to business practices, where credit is used. But I am talking about the individual me. I discovered that I had no credit history when I tried to apply for a credit card some time ago. I thought it prudent to have access to credit when required for emergencies. I completed the forms proudly listing my assets, income and the usual things one is proud of and with some pride I also noted that I had no debts.

Now I would have thought that at my age, being debt-free would be something to be proud of. But apparently not. I received a rather curt note from the credit card service supplier – a subsidiary of one our major banks – informing me that as I had no record of debt and no liabilities, I was not able to go into debt.

I was stunned. Had I spent my life in debt, owed money and was barely managing to keep afloat financially as a private individual they would gladly not just provide me with a credit card but also offered to consolidate my existing debts which they would manage at a low rate of interest for a ‘honeymoon period‘.

Of course, after the honeymoon was over the interest rate would have shot through the roof and, given the many variables in life this approach to lending money could well have caused me problem. To me this indicates a major problem with the approach of banks and lending practices.

The more one has been in debt, the easier it is to acquire further debt and there is little incentive to save as amounts under a $100,000 attract very poor rates from the banks for borrowing money from the customer, but the same money lent out to borrowers comes at a high cost .

Money, like all things has to be bought and the Interest we way is the cost of that money.

I blame my mother; she taught me to be prudent in my financial dealings and to always try and pay cash or come to a mutually rewarding outcome avoiding banks, and now the banks were punishing me for not having borrowed money. Having once had a mortgage to buy a house did not count because that mortgage was discharged a long time ago (and no more funds being paid to the bank for that one).

Where does that leave the ordinary person that has no credit history or worse, a very bad credit history after having bought into the ‘credit scam’? After all, you are buying the use of money which belongs to other people that have put their money into banks to keep it safe (or so the story goes) and the bank acts as a ‘middle man’ selling you something it does not even own itself. I suppose one could argue that it is lending you the use of money that belongs to a third party and has some obligation to ensure that that money is safe for that third party. Given the history of banking, even this appears a myth, for in buying certain ‘bank products‘ and ‘bank services‘, the customer (lender to bank) is actually taking a huge risk. Banks are involved in superannuation schemes, retirement funds and all manner of ‘money-selling ventures‘ often using other names and identities. When things go terribly pear shaped as during the Global Financial Crisis, several of my friends lost large amounts of money that was meant to have been protected for their retirement.

One minute it was there, then next the New York Stock Market goes belly up and people get bitten in their financial arse in Australia. I remember at the time asking the financial advisors that had organized the monies belonging to friends as to what happened to these investments for retirement. The consensus comment was – “It is gone !” How can money just disappear? How can billions of dollars make a great escape, never to be seen again? The usual refrain was a referral to the stock market, where such funds had been applied to a vast assortment of companies (some superannuation funds would list over a hundred assorted companies, i.e. 1% of holdings to ‘Smelly Fish Pty Ltd’, 0.5 % of holdings to ‘Toe Rag Pty Ltd‘, ad nauseum. (Of course none of the 1% could even be found on the internet for verification but as part of an investment portfolio sold by a bank-related Fund had appeared all to very secure).

Money cannot disappear; it moves from one account to another. There is no money eating monster that digests huge amounts of liquid cash turning it into thin, bad smelling air. Indeed, no one can tell where these other accounts are but had I been in charge of financial policy and governance I would have applied the old saying “Follow the money trail” with vigour.

Where does this leave the person that requires cash at short notice and unable to buy such funds from a bank? Well, the answer is simple: being regarded as a higher risk, the borrower is forced to obtain funds from legal loan sharks in Australia. The cheerful franchises that offer money at incredibly high rates and would sell your children into prostitution or coal mines if the proponents of neoliberal free market trickledown theory had their way .

Next time I might carefully examine the many wonderful money laundering services that have become part of the Australian financial scene.

 

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14 comments

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  1. RomeoCharlie29

    Yeah but what about the used car?

  2. Canguro

    If ever you feel the need to wallow in nauseous disgust at the wretchedness of the capitalistic modernity we are forced to endure, then the 2004 documentary The Persuaders, a PBS look at the advertising industry, is as good a place to begin as any.

    Written and to some extent also narrated by the eminently sensible Douglas Rushkoff, it’s a fly on the wall look at the mindset of the operatives charged with selling stuff, anything really, to us, the market.

    I was struck by an interview with Kevin Roberts, former CEO of the advertising agency Saatchi & Saatchi, a man credited with the idea of lovemarks as an advertising concept. He claimed that he had discovered the way to turn brands into objects of devotion, and said that brands that can create loyalty beyond reason are going to be the brands where premium profits lie. The following, he said, are the key ingredients to create lovemarks:

    Mystery: Great stories: past, present and future; taps into dreams, myths and icons; and inspiration

    Sensuality: Sound, sight, smell, touch, and taste

    Intimacy: Commitment, empathy, and passion

    When asked to explain the idea of lovemarks, he paused, breathed deeply, looked heavenward, and answered by saying that it’s a brand that you recognise as having some iconic place in your heart. And then went on to rhapsodise about the junk-food snack Cheerios…

    Let that sink in. Loyalty beyond reason. An iconic place in your heart. These people really believe in this phoney hooey, and they are paid enormous amounts of money to convince us that their delusions ought to be ours as well. Shallowness presented as profundity, which is about all it can be, a shadow play, hucksters selling raffle tickets for a false promise that a life devoted to materialism is the life worth living.

    It’s for that kind of persuasive bullshit that you see such weirdness as people queueing around the block outside of Apple stores, waiting to be the first to get a new iPhone model, or people signing up on a twelve-month wait list for a heavily touted vehicle.

    I was reminded of the late comedian Bill Hicks, who asked during a show if there were any marketers in the audience, and then went into a three-minute harangue, abusing them in the severest of ways and suggesting they did humanity a service by just killing themselves: ‘You people are the scum of the earth’, he said.

    Hard not to disagree.

  3. Warren

    It is indeed a funny world. I’m guessing your age may have been a factor, although it seems the bank would always get their money back.

    My son borrowed to buy a house on his own at age 26. But he had never had a credit card or borrowed money. We were surprise how much the bank (not one of the big 5) was willing to lend him.

    Many of my friends are not paying out their mortgages fearing that they won’t be able to borrow funds in the future. But redrawing is easy. Perhaps this is the banks cunning plan. It’s a weird world.

    I’m also curious about the used car.

  4. leefe

    Canguro:

    A long film is not necessary to realise the depths of depravity attained by some people in the advertising/marketing world. Just watch any episode of Gruen containg Russell Howcroft.

  5. Michael Taylor

    Slightly related…

    About 40 years ago one of my mates in Adelaide set off for South Rd with his dad (for guidance) to buy his first car (from one of the many used-car dealerships along the road.)

    He purchased the car, with dad’s approval from a place I’ve forgotten the name of… I think it had “Paul Jones” in the title, but I could be wrong.

    Next day, my mate and his dad took the car back complaining (as you would) to the salesman:

    Dad growls: “You sold my son a car that doesn’t have reverse!”

    Salesman responds: “You didn’t tell me you needed a car with reverse.”

    True story.

  6. Harry Lime

    Cut it out Michael,you’re going to give used car salesmen a bad name.For the record,in my chequered career,I once sold cars I’m ashamed to admit,and I fucking hated it.Anyway it was only one of about sixty jobs that I had in a formative life.I moved on to more esoteric employment shortly after…like road marking.(.Knights of the endless bitumen), and installing swimming pools.

  7. Canguro

    Harry! Soul mate! I had about sixty jobs too, including a two year stint on a motorway picking up litter in the median strip and on the shoulders (I was team leader, drove the truck, the four other guys did the hack work). I thought I was the only one who changed jobs every year or two, or more frequently; record for the two shortest being half a day and two days respectively; an oiler in a spinning mill and a dust bagger in a rag-plucking factory.

  8. Harry Lime

    Canguro, we could probably have an interesting chat about ridiculous choices and lost opportunities.Although I’m guilty of wasting a fair bit of time,I had a lot of laughs and did a few naughty things.How my wife is still with me after 55 years is a mystery,maybe she’s just a bad judge.I hate to one-up you, but one job I had (apprentice carpenter) with Vicrail, lasted until morning tea, and another with State titles Office (Vic) lasted until lunch. I went for a counter lunch and failed to return.What the fuck…it’s been a lucky life despite the pricks that want to screw us.By the way, I think I’ve forgotten half the jobs I had.On purpose.

  9. Canguro

    You’re right, Michael. You win, hands down. I did a formal count, only fifty-three jobs. On the other hand, I can count 82 discrete locations that I have called home for shorter or longer periods. Thankfully I now have a secure roof over my head and no threat of losing it.

    In regard to lousy pay; my lowest was $12/week net, fully found on Mt Clarence Stn at Coober Pedy, the first job. At the other end, I once pulled $60K plus a company car towards the end of my working life, prior to being retrenched from that business along with another twelve staff, the January 1999 massacre that catalysed a descent into the pits of hell for a number of years.

    [I saw your post, but you seem to have pulled it]

  10. Michael Taylor

    Canguro, my first job was $15.65 a week. Impressed them so my pay went up by 50c the next week. Funny, but back then that small amount got me by week to week. Paid Mum and Dad $5 a week board, and my health insurance was $1.10 a week. You’d get change out of 40c for a packet of smokes and a box of matches.

    I was exaggerating about having so many jobs… so I deleted the comment.

    Took the post down, too. Apparently I had it all wrong. Wasn’t in the mood.

  11. Phil Pryor

    Michael, I went quiet on your post (now gone) because it was clearly exploratory, introductory, a little spar to open a range of offerings from us offals, and finished suggesting you carry on. So, don’t give up. The way to a revision of our history is so difficult to envisage as the conservative history wars types will snarl and tinker anyway, while inside the workings of education officials, one can only imagine the further entanglements for revision in curricula, texts, etc. I still have a folder of history wars material, shared classes with the appalling and dull Jack Howard (curiously, Windschuttle went there later) and had to be careful not to betray the exam hopes of students who were to face the unsighted marker. Few nations have honest orthodox history traditions.

  12. Michael Taylor

    Phil, it’s all good. I actually found your comment encouraging.

    It was latter comments. I’m not in the mood for a debate today.

  13. Michael Taylor

    PS: Phil, I’ll put it back up later in the week with a few changes when I’ve got my fight back.

  14. wam

    I am a Luddite the only card I have, since last century’s bank card, is diner’s and there is a sneaky pleasure in eating a woolies orange knowing I won’t pay for it for a month. The downside being they adjust their prices as if we all use diner’s/amex. Sorry that you pay for my indulgence.

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