"I'm Considering Filing Bankruptcy" - St. Louis Proves A Harbinger Of Things To Come For Subprime Auto Lending

Tyler Durden's picture

"Subprime lending is a calculated risk - we know that some of the customers won't pay, we just don't know which at the time the loan is made. With higher default rates come higher expenses, and higher interest rates are necessitated to remain solvent." That's a quote made in a statement by Midwest Acceptance corporation, who specializes in high interest car loans for subprime borrowers in the St. Louis area.

Stories like the one involving William Lesinski are becoming all too common in the St. Louis region. Lesinski's story begins with taking out a ridiculously high interest rate loan for a car to be given as a graduation present for his son, and ends with his wages being garnished - beyond the amount of the court judgement.

Wanting to buy his son a car as a high school graduation gift, Lesinski put $1,750 down and drove off the lot in a 2003 Ford Mustang. The loan for the car was $11,367, and it carried 29 percent annual interest over nearly four years. His son would make the payments, but the loan was in Lesinski’s name.


After paying the balance down to a little more than $10,000, his son, who had stopped making insurance payments, wrecked the car, Lesinski said. In 2011, after more than $4,000 in interest had accrued, Car Credit City’s in-house finance arm, General Credit Acceptance, sued Lesinski. Factoring in attorney fees, the court judgment came to more than $15,000.


After Lesinski fell behind on a payment plan later that year, General Credit Acceptance began garnishing a portion of his check from a Fenton painting company. It hasn’t stopped since.


As of Friday, the company has taken $22,600 of Lesinski’s wages. Because Missouri court judgments can carry the interest from the initial contract, little of that money has gone toward principal. Lesinski assumed the balance was near zero. In fact, he still owes almost $13,000.

In order to get a better understanding of the subprime auto lending activity in the region, the St. Louis Post-Dispatch analyzed court data from suits involving three area auto finance companies. Since 2010, those firms alone have filed more than 15,300 lawsuits against borrowers in local courts, and the vast majority of cases resulted in a judgement against the defendant, after which the lender often sought to garnish wages from the borrower.

The Post-Dispatch found that contracts involved in the suits typically have an interest rate between 24% and 29.75% over terms ranging from three to five years. The Post-Dispatch followed up with interviews of borrowers, many of whom had rates of nearly 30%. Some said they knew the interest was high, but signed papers because they couldn't get to work without a car. Others said they didn't understand the terms until they fell behind.

"I wasn't very good on paperwork" said Lesinski - that's an understatement.

Although Lesinski isn't alone in claiming ignorance...

"My clients aren't sophisticated enough to know that they should negotiate the price or interest rate. They just think this is the interest rate they deserve. They think they deserve a 30 percent interest on a car loan." said Rob Swearingen, an attorney who represents borrowers being sued by subprime lenders. "This is the way people get poor or stay poor in this country. This is the biggest purchase most low-income consumers will ever make. They don't buy houses. They buy cars. And if they get ripped off at a young age, you get a judgement against you, and you start off behind the eight ball immediately." Swearingen added.

Acording to the National Alliance of Buy Here Pay Here Dealers, those that focused on buyers with poor credit histories had a default rate of 31% in 2014. But even in that niche, loans carrying a 29% interest rate are too high said Ken Shilson, who heads the group. "When you load that kind of interest on a car they can't afford anyway, it's destined to fail. If you set someone up to fail, they're going to fail on their own. They don't need any extra help." Shilson said.

According to research firm Experian Automotive, the average subprime borrower received interest rates ranging from 15.3% to 18.5%.

Because many people sued over debts don't show up in court, debt collection dockets are often a parade of default judgements against borrowers. For those that do go to court, many were put on payment plans through consent judgements, but when they fall behind, the contract interest and the original unpaid balance applied, and lenders frequently resort to garnishing wages at that point.

Christopher McGraugh, now a family court judge has presided over countless debt collection suits and says that "In many of these instances, you can never get out from underneath these judgements because the interest rates are so high."

Cerissa Robinson said she is considering filing for bankrupcy in order to get out from underneath a mountain of debt. Robinson took out a 26.75% interest loan, and yet another to cover the down payment, which had an interest rate of 62%. Cerissa lost a job and had to take one at lower pay - "I'm considering filing bankruptcy"

David Chapnick, president of Modern Finance said that he makes extensive efforts to contact borrowers before resorting to lawsuits: "I don't want to sue anybody, but I've got to pay postage. I'm paying rent. I've got to run a business here."

At the end of the day, Lesinski says "Maybe I wasn't very smart. Shame on me. But damn, shame on them."

* * *

As we have pointed out numerous times, student loans and auto loans are the next two credit bubbles waiting to erupt and cause chaos in the markets, and St. Louis is a harbinger of what is to come. While we don't condone taking advantage of anyone's situation, we are stunned to see these decisions be downplayed by individuals as just chalking it up to "I wasn't very good at paperwork" and lawyers telling everyone that clients aren't "sophisticated enough". Then again, the fact that Bernie Sanders receives a large portion of his campaign funds from the government, we shouldn't be surprised at all.

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Tinky's picture

"Maybe I wasn't very smart. Shame on me. But damn, shame on them."

Hmmm...sounds like a vaguely familiar refrain, but I can't quite place it.

mtl4's picture

That is flat out extortion..........they certainly earned what they get come the next financial crisis (pitchforks and torches).

A Pimp's love is different's picture

A few less tats & maybe he could have afforded his payments.

Haus-Targaryen's picture

How about a Chevy Corsica one can have for $1,400 and pay cash for it as opposed to something you would never have the opportunity or ability to pay?  

Stupidity is amazing sometimes.   

decon's picture

The great majority of people's woes are the result of a long series of bad decisions.  Starting with all the tats. Could have paid for a cheap car with all that skin ink.

DownWithYogaPants's picture

Recently spent 2 years workingin St Louis.  Felt like I was in the suburbs of Outer Niggeria.  In case you are wondering I would not recommend it.

Haus-Targaryen's picture

Clearly the guy is a moron.  

Go to Craigslist and get something like this for your kid:



jms2112's picture

Damn that aint a bad car!  Maybe I'll take it

DownWithYogaPants's picture

Many of these turds can't even swing 1500 bucks cash + Mo has a property tax on cars and oh I forget the best part:


In Az before I went to Mo: liability insurance ONLY = 180 USD per 6 months


In Mo: Liability only = 720 USD per 6 monthes.  For those of you who borrow money to buy a camaro that's 4X


Same 100k/300k both places. I suspect it is because of the Niggerians in St Louis.  There is just no other way to say it than some people stink the planet up pretty badly.

stacking12321's picture

dumbass with ugly tatoos makes bad financial decisions.

slow news day, tyler?

people shouldn't be protected from their own stupidity, that's how they learn.

banks shouldn't have been protected from their stupidity either in 08.

Tom Servo's picture

I lived in St. Charles, MO for 30 years.  If you felt like you were in the suburbs of outer niggeria you were living in the wrong places.  Granted there were lots of places I would never bother going in the city and north st. louis county.


You think auto insurance is bad in MO, it's 3x worse in Florida, but we also lead the world in people with extra chromosomes getting behind the wheel...


NuckingFuts's picture

I myself am also a STL refugee and know the area very well. Unfortunately between the poor public education and the continual grasping for the glory days of the past (STL was once the 3rd largest metro area in the country), St. Louis is a dying city with average suburban/middle class decline. I just applied for a job and might go back if the offer is good enough.... Can't say I'm looking forward to it but you gotta do what you gotta do to get by. Times is hard and I work for a living. Thank God I'm not a native of the place and my 2 boys would go to private schools. I figure if I bite the bullet and do it I can retire in 10 years at 55 and GTFO, so maybe it's worth it. Sorry for the ramble, I have a lot on my mind about it, thanks for listening. ZH is cheaper then a therapist.

cheka's picture

catch a clue

it's not the skoolz.  it's the people that go to those skoolz

NuckingFuts's picture

I'm not disagreeing with you.

willwork4food's picture

Good luck with the move, should you decide. Anywhere is good as long as there are people with you or you discover there that you love or care about. (((God))) is everywhere. Even on the southside of Chicago.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) willwork4food Jun 6, 2016 8:27 PM

Lesinski needs to learn to perform exceptional Lewenskis. He'll have that car paid off in a few weekends.

DownWithYogaPants's picture

I was in STL working a really nuts job for a start up tech company that was crazy.  I had no plan to stay a long time because it snows there. Thus I went to a cheapy place where I would not have to drive very far to Bates Ave.  Was in cellar of Victorian mansion.  ( So I worked at the Bates motel with Charlie Mansion. )  Stayed up by 40 and Grand Ave.  It was a limited stint.  My point is no matter where you live in the St Louis area you really can't escape the effects of being so near Niggeria.  Arizona while it has its analogous drawbacks there is nothing worse than a silverback.  I made an interview trip up to Washington/Idaho border and that was a breath of fresh air as was a trip to New Hampshire where there was even a white guy behind the counter at the diner.  Certain people are wildly underestimating their and their cultures value.  

NuckingFuts's picture

STL city is fucked for the reasons you point out. You can go out to st. Charles co and escape it some. A few inner ring burbs like kirkwood, Webster etc... Are still pretty white. I'm not saying it's my first choice or that your point is wrong.

Tom Servo's picture

If you lived near 40 and grand, you were literally blocks away from the worst of the worst ghetto... I can see why you had a bad opinion.  NuckingFuts is correct though, it's a dying city pining for the glory of yesteryear that is never coming back.  THe only reason I will ever go back there is to get some decent thin crust pizza and toasted ravs, and gooey butter cake.  I know of some decent mexican places also.  (hey, i'm fat...) Leaving there was the best move i've made, I can still watch their baseball team anywhere in the USA...


I stayed around st. charles / st. peters / and outside 270 (except north) whenever possible

WayPastCaring's picture

Tom - learn to cook those and you never need to go back. Those are a lot easier to make than you think. No need to risk your life for food you can cook at home. :-)

Placerville's picture

Niggeria.......freudian slip...........or not.

crazzziecanuck's picture

Sauce that's good for the goose is good for the gander.  Unformunately, the justice system doesn't work that way.

Bring back usury laws.

Johnny Caine's picture

Yep its definitely the guy paying 30% interest fault. That should be fucking illegal, it's called usury, holy shit. Are there a bunch of banksters commenting on ZH? The white shoe boys rip you off for 60 Trillion and youre judging some blur collar bump kin for getting shafted by a bank. Nice

mtl4's picture

That's not just usury, it's called racketeering and they do have laws for that assuming you haven't already bought your "get out of jail free" card beforehand.

Johnny Caine's picture

Yep its definitely the guy paying 30% interest fault. That should be fucking illegal, it's called usury, holy shit. Are there a bunch of banksters commenting on ZH? The white shoe boys rip you off for 60 Trillion and youre judging some blur collar bump kin for getting shafted by a bank. Nice

hedgeless_horseman's picture

Lesinski put $1,750 down and drove off the lot in a 2003 Ford Mustang. The loan for the car was $11,367...for his teenager.


The world is filled with these idiots.


The lil_horseman have all driven the same 1980 German diesel for their entire highschool careers, no speeding tickets or traffic fatalities for obvious reasons.  I think we paid about $2,000 in cash.  They just figured out how to diagnose and repair an electrical switch on it last weekend.  The part cost less than $30, but the self-esteem they earned by doing it themselves is priceless.


We are not poor, and that is one example of why.


After paying the balance down to a little more than $10,000, his son, who had stopped making insurance payments, wrecked the car...


It is time, America, for the next logical change:

ObamaCar: Automobile Insurance Subsidized Hope Act

Beowulf55's picture

"Mathematically Challenged" is the epitaph written on the tombstone of America.

crazzziecanuck's picture

Unfortunately, that's the case everywhere.  Look at Europe or China.

all-priced-in's picture

"It is time, America, for the next logical change:

ObamaCar: Automobile Insurance Subsidized Hope Act"


I assume double indemnity if destroyed in a race riot or BLM protest would be part of the program.



glenlloyd's picture

I will never borrow to drive something 'better' or something that helps me pretend I'm someone I'm not. I have two old VW TDI diesel cars, one I just finished actually. I'll be driving those two for as long as I possibly can. I know how to fix them and they're not technically so sophisticated that uncle .gov can track me in them.


Big Brother's picture

When you say "1980 German Diesel", I read, "Mercedes Benz W124".  If there ever was a word & definition for "opposite of 'planned obsolescense'" I don't know what it'd be, but it'd have a picture of a W124.

hedgeless_horseman's picture

The analog clock keeps perfect time and the original paint job and leather interior is still in good condition! Those babies are amazing feats of engineering and manufacturing. Still pulls chicks, too!

Déjà view's picture

They need it in 'Loan' Star State-Texas, 1 of every 3 drivers lacks libability insurance-highest in nation.

Keyser's picture

And none of them speak English... 

MalteseFalcon's picture

I know we all love a free-wheeling anything goes kind of economy with Darwin take the hindmost, but in the case of Mr. Lesinski and these usurious auto lenders, I prefer than the government simply say 'no'.

"No, Mr. Lesinski, you can't have that Mustang until you've saved for it. And lose the 'tats' unless you are planning on joining the navy or going to jail."

"Hey Car Credit City, get your interest rates down to prime plus a scientifically determined, regulatory approved risk premium or shut down.  And let's adjust your current loan book."

SoilMyselfRotten's picture

In fact, he still owes almost $13,000.


Which at the rate he's going will cost him another $100,000, lol

Chuck Walla's picture

Blue Sky has franchises? Who knew?



PTR's picture

I was wondering: at 30% interest over 48 months, how many cars would he'd be paying for?

SuperRay's picture

Who'd thunk there are consequences to making dumb ass decisions? Did he get the tats on layaway too?  They may deman a pound of his flesh.

Keyser's picture

Just look at that picture of this fine, upstanding Murkin citizen... I really don't blame him, I blame the public school system, social promotion, lack of upbringing by his parents and a socio-economic model based on excess consumption using borrowed money... America as I knew it is dead, the only thing left is the facade... 

squid's picture

He had enough cash for those purdy tatoos.



COSMOS's picture

Bingo Keyser, we are starting to turn in and cannibalize ourselves financially. The picture will only get worse down the road. We are emulating the decline of the Roman empire but on a much quicker time scale.

Dame Ednas Possum's picture

If it wasn't for welfare, locusts like the useless eater (and millions of others) wouldn't exist in the first place.

Keyser's picture

Looks like LBJ's Grand Experiment is a total and complete failure that is going to take down the nation... Sad, but true... 

CuttingEdge's picture

This guy may be a muppet, but compared with the UK super muppets living month to month on "payday loans" with an annual equivalent interest of  2500% or more (yes, that isn't a typo, I shit you not) he aint in their ballpark.