A sense of honor

The theme of this week’s This American Life radio program is ‘Scenes from a recession.” In the first act:

Ira goes to the Rogers Park area of Chicago to talk to some condo owners who are in a precarious situation—since the housing market crash, the developer who renovated and sold them their units has all but disappeared. He’s in foreclosure on half of their building’s units, and in the meantime, they have no one to pay for the upkeep and maintenance of the building they all bought into.

It’s a nightmare situation for the owners. At the end, Ira talks with two of the owners about why they haven’t just defaulted on their mortgages in order to get out of this horrible situation. First, each owner concedes that the consequences of default would not be that onerous for them, but then each owner explains why she stays. The first owner says it’s a matter of honoring her word: she signed a contract, she has the ability to pay on it. The second owner says that she stays out of a sense of obligation to the community of unit owners. Her departure would just make the situation that much worse for the remaining owners.
I’m shocked at the stark contrast between the attitudes of these people and of the people and institutions who got them into this situation–not just the slimy developer who fled the country, but also the bank that is stalling on foreclosure as long as possible, when foreclosure is what the unit owners need to move forward.
I know that this story was produced so as to highlight this contrast, but I’d say it’s a pretty clear depiction of how we’ve gotten into our current economic mess.

Car buying sucks, continued

After relating one of my car buying horror stories yesterday, I should offer some advice to help others from getting screwed. Here’s a detailed Consumerist entry on how the four-square sales method works and how to get around it.
Whether or not the salesman uses the four-square method, his goal is to mix together the several different transactions you’re undertaking (buying a car, selling a car, getting a loan): by lumping those together, the salesman makes it harder for the consumer to spot that he’s getting screwed in any individual transaction (though in the story that I linked to in my last post, the dealers tried to screw this inexperienced car buyer on just the one transaction).
The best thing to do is to eliminate as many of those combined transactions as possible ahead of time: get pre-approved financing from your bank or credit union before you walk into the dealership, sell your old car yourself. But if you have to do two or more of those transactions at the dealership, undertake each one separately and make sure you understand the terms of each one: this is the amount I’m being given for my trade-in; this is the amount I’m paying for the car I’m buying, and these are the terms of the loan: interest rate, period, amount financed, etc.

Car buying sucks

Here’s another fine example of why people dread the car-buying experience so much. In short: guy walks into multiple dealers with cash in hand, knowing what he wants, dealers try to screw him every which way.
I’ve had several bad car-buying experiences, but this one was the worst: back when we lived in New Jersey, a tree limb fell on our beloved Camry and totaled it. A few days later, I walked into the local Toyota dealer, explained to the salesman what had happened, and told him exactly what I was looking for: another 2-3 year-old Camry with a particular set of features, color doesn’t matter.
Instead of consulting his inventory, the salesman’s response was, “Well, let’s go see what we have on the lot.” Already off to a bad start. As we walked around the lot, the salesman would point to a car and ask, “Do you like that one?” or suggest “Why don’t you drive that one home and let your wife take a look at it.” He would point at another car and ask if I’d like to test drive it or if I liked the color.
Each time, I responded with “Does it meet the requirements I gave you?”, “As I mentioned, I don’t care about the color”, “My wife only cares that it meets the requirements I told you” or “Once we find a car that meets my requirements, sure, I’ll test drive it to make sure it runs.”
Each time we went through this process, my blood pressure inched up. After we’d walked around the lot for about 10 minutes, I had had it. I don’t remember exactly how I expressed my frustration, but when we went back into the showroom, the salesman excused himself to go talk with the sales manager. A few minutes later, the sales manager asked me into his office; I recounted the story above, to which the sales manager just replied, “Well, it looks like we’re not going to sell you a car today.” I walked out of that dealership never to return.
In hindsight, that stupid salesman managed to turn away a customer who was already in love with his product. I was an easy sell.
And it amazes me how many car salesmen seem incapable of adapting their sales pitch to the individual customer.
(geez, my heart rate is up just writing this blog post)