John Oliver explains the terrifying, predatory, Wall Street-feeding descent of used-car dealers

Americans love their cars, "but America's auto obsession isn't just a hobby," John Oliver said on Sunday's Last Week Tonight. Some 86 percent of U.S. workers use cars to get to work, "and if you don't have a car, holding down a job can be a tremendous challenge." But cars, of course, are expensive, which brought Oliver to the theme of his latest seriocomic explainer: auto lending. Nearly a quarter of car loans are now of the subprime variety, he said, "and if the phrase 'a boom in subprime loans' is making your eye twitch with flashbacks to the mortgage crisis, just wait, we will get there."

First, Oliver dove into the world of "buy-here, pay-here lenders," or dealers that provide their own loans — and charge an average interest rate of 19 percent. "It's just one of the many ways in which, when you are poor, everything can be more expensive," he said. About a third of buyers default within seven months, and when the dealer repossess your car, they don't have to refund your down payment, and they can even go after you for more money. "So you can easily end up with no car and thousands of dollars in debt," Oliver said, while the dealer just sells your car again — sometimes several times. Buy-here, pay-here is losing market share, he added, but mostly to subprime lenders.

That's when Oliver touched on how the subprime lending market for cars is eerily similar to the speculative mortgage-bundling bubble that crashed the global economy a few years back. The buy-here, pay-here industry has taken note, and taken action. "The news that used-car dealers are predatory is clearly not new, but it seems these days market pressures are forcing them to be more aggressive and take more risks," Oliver said. And like many of Oliver's segments, he encapsulates the main points in the last three minutes, with the help of guests, in this case Keegan-Michael Key, Bob Balaban, a used car dealership set, and a sound machine. Watch below. Peter Weber

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