Woman on disability leases a BMW M6...and claims it is dealer's fault that she can't pay

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Auto payment defaults doubled last year and are expected to get worse. It is another financial meltdown waiting to happen similar to the crisis in the home mortgage industry, according to one consumer group. A CBS 5 ConsumerWatch investigation has found consumers locked into cars they cannot afford.

According to Power Information Network, 1.85 of the 9.6 million customers in 2006 who leased or financed a new car were subprime borrowers or consumers with weak credit.

Vivian Snyder has strong credit and is not classified as subprime, but she is one of many consumers who can't afford the car she leased. Snyder drives a brand new convertible BMW with a MSRP listed at approximately $100,000.

Most consumers can't afford it, and neither can Vivian. That's because the monthly lease payment is $1,300. It eats up half her income which is a $2,500 disability check.

Yet, she got it at BMW of Fremont without showing a drivers license, pay stub, or any proof of income.

How did this happen? Apparently, her income was inflated by nearly 150%.

According to consumer advocate Rosemary Shahan with Consumers for Auto Reliability and Safety the practice is common.

"This is an epidemic of loan applications being falsified. In fact, the model for the meltdown we're seeing in real estate and home mortgage lending was auto lending."

Vivian's story starts like so many others. She went to the dealership which is owned by Autonation, the largest automobile retailer in the country just to look.

She got caught up in the excitement and said she told the salesperson about her $2,500-a month income. But, what ended up on the credit application was the amount she could be making if she was not on disability.

"He (the salesperson) put what he thought I needed to get qualified for the car," according to Vivian.

She admits she signed the lease credit application with her income inflated.

But CBS5 reviewed the lease application handed to Vivian as she left and compared it to a page from the same multi-layer document she retrieved days later.

Vivian's income had been changed once again - from $6,000 to $8,600 without her knowing.

General Manager Larry Long said a salesperson insists he changed the figure while Vivian was present.

"I witnessed that sale. I saw her and congratulated her. She was so thankful. She was so passionate about wanting that car and would have done anything to get that car," Long said.

Larry directs the blame on the finance company - BMW Financial Services.

"It's up to them to look at the credit application and they will see it at face value what the customer puts on paper as to be the truth," Long said.

Martha McKinley, a spokesperson with BMW Financial Services, said, "We have investigated this matter internally, and we are satisfied that BMW Financial Services acted appropriately at all times during the application and credit review process."

Vivian has only a few options. She can plead with the finance company to release her from the lease or have the car repossessed, losing her good credit and a $30,000 down payment which consisted of her entire retirement savings.

"I'm greatly embarrassed," Vivian said. "I should have looked over the contract better."

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

Totally calling them right now and seeing if they can do the same for me.
This deal is HOT!!!

I don't see mass defaults like in the r.e. market. It's not like cars or diamonds or dental work (lots of financing there now too) is going to suddenly depreciate. Lenders may be greedy, irresponsible and delusional when it comes to home prices always going up but at least they can't assume the same about most other things. Defaults will inevitably increase on other debt, including credit card debt, but that in itself is unlikely to create a crisis. On the other hand, if we do enter into a recession, and defaults on credit increase while lenders are still amassing mortgage losses, it could exacerbate things. It's all a house of card, you know - currencies, secondary securities markets, unsecured debt - all a house of cards. Luckily it's a house of cards that only requires a modicum of confidence to continue to hum.

Her "disability" didn't happen to be of the "mental" kind, did it?

on a side note, your story reminds me of this one from my local news station. http://www.wlbt.com/Global/story.asp?S=7845317

people getting bad loans, take no responsibility, and the news article says its her house and not the bank's house!

Squeezer99 said: on a side note, your story reminds me of this one from my local news station. http://www.wlbt.com/Global/story.asp?S=7845317

people getting bad loans, take no responsibility, and the news article says its her house and not the bank's house!

Woman "All I ask is for them to let my house note stay at $675 but they raised it to $900."

She shoulda said "please"

oh btw, THESE IDIOTS CAN DOWNSIZE AND MOVE TO A SMALLER "AFFORDABLE" HOUSE.

While it's hard to argue with the blame placed on the idiot consumers, I think we all tend to overlook the actions of the car dealer (or the mortgage broker) who facilitates this nonsense.

That car dealer knew her entire income was from disability and yet 'made her happy'. And undoubtedly at full sticker price and a big profit. The people upstream from the mortgage brokers knew the debt they were repackaging was bogus, but they sold it by the billions all over the world. Joe Blow down the street couldn't have caused this meltdown by himself.

Blaming the idiot consumers for this whole mess is like blaming consumers for Enron. We've all just been had on a monumental scale - and it wasn't just by the stupid consumers around us. They've always been there. If we allow the blame to be placed on the little guys, we miss placing it where it belongs. Which is just what they're hoping for.

Idiot consumers are laughable. Idiot financiers who have learned to exploit them (and us) are truly scary.

<removes tinfoil hat now>

I think someone might have taken a significant portion of those $30K she put upfront to make the deal go through.

And I hope local authorities look into her "disability"

Regardless of what her income was, she knew what the payment was going to be and should have known if she could afford it or not.

janwad said: While it's hard to argue with the blame placed on the idiot consumers, I think we all tend to overlook the actions of the car dealer (or the mortgage broker) who facilitates this nonsense.

That car dealer knew her entire income was from disability and yet 'made her happy'. And undoubtedly at full sticker price and a big profit. The people upstream from the mortgage brokers knew the debt they were repackaging was bogus, but they sold it by the billions all over the world. Joe Blow down the street couldn't have caused this meltdown by himself.

Blaming the idiot consumers for this whole mess is like blaming consumers for Enron. We've all just been had on a monumental scale - and it wasn't just by the stupid consumers around us. They've always been there. If we allow the blame to be placed on the little guys, we miss placing it where it belongs. Which is just what they're hoping for.

Idiot consumers are laughable. Idiot financiers who have learned to exploit them (and us) are truly scary.

<removes tinfoil hat now>

These are two totally and completely different problemes. If you sign a contract/loan agreement you are responsible for reading and understanding that agreement. Personally I don't care if a person decides to spend 50% of their income on a car it is their business. If they had changed the terms of the contract or the price in some way I would agree with you but from the sounds of it that is not the case.

The other side of the equation is BMW's problem if their loan officers and sales people are falsifing income to make loans BMW finicial is the one that is being defrauded along with whoever they sell their loans to assuming they sell them off. It is not like there are federal regulations on what kind of credit/income a person has to have in order to get a loan so if a bank was dumb enough to write a loan that would consume 100% of a person's income it would be legal although very stupid on the bank's part.

lampy2k4 said: it would take some balls to do that (because media will be all over the "poor disabled woman") but perhaps that would teach some lessons to these people who can't reap what they sow.

I doubt people will feel bad for her though. If she got a 700K house then maybe "evil bank trying to kick disabled person out of her house" would work, but with a 100K car probably wouldn't.

On a side note, I think I know what might inspire her law suite Link This one ended up spending a year in mental institution, and settled with AMEX without paying anything.

This woman sounds like the type of person that posts on Creditboards.

My favorite part:

"a $30,000 down payment which consisted of her entire retirement savings."

I actually believe the dealer based on that & what he stated:

She was so passionate about wanting that car and would have done anything to get that car," Long said.

Cue a screening of 'Idiocracy'

...idiot.

CoffeeEater said: $30k down payment + $1300 a month for a lease? Geez.

If you use a calculator on BMWNA, with 30K down, a monthly payment is $650-750 depending on the miles driven / yr. I'm pretty sure ~15K of her original downpayment ended in salesperson's / finance manager's pockets.

I was about to buy a used 2006 converitable this weekend. But (unfortunately) after reading this news, I have decided to postpone my purchase.
The car I eyed , the original MSRP was more than 27k, but dealer is only asking for 17k now. I thought that is a good deal. But it looks like if I can wait a little longer, I can get an even better deal on other used cars.

Few sources have pointed out, 20% of the auto loan issued between 2005~2007 are subprime loans.
We should expect to see used (luxury) cars selling for pennies on dollar in the near future.

$10 to the first person to post a pic of the car parked outside Vivian's trailer.

raringvt said: $10 to the first person to post a pic of the car parked outside Vivian's trailer.

If you click the video on http://cbs5.com/local/auto.loan.defaults.2.645976.html , you will find out
she lives in a townhome with a 1 car garage. I am curious did she buy that townhome on subprime mortgage
too? Sooner or later, we would see the same woman crying on T.V. saying "they sold me a house I can not afford!!"

Did I qualify for that $10 ?

No offence or anything, but I don't understand the term "disability" very well. What kind of disabilities are there were you can go around driving (a $100,000 car no less!), but are considered unable to work? I mean even driving is a profession, isn't it?
Again, I am not trying to offend people who have medical problems, it is just that in other countries you can easily tell people who are on "disability" and most often drive cars that are modified to accomodate their specific medical situation.

ifyouhavetoask said: heynoel said: broke25engineer said: ArbolLoco said: personal responsibility?

what do you call a dealership that hands out $100,000 cars to random people without verifying income?

so stupid it should be criminal.

The dealership doesn't have to verify any income. It's in the market to make money, not to protect people from themselves.
The dealership has already cover it base by taking a $30K deposit. The MSRP of the car is around $100K, thus the deposit is about 1/3 of the car's invoice price. Since they can reprocess the car if the lady stop paying


I wish I could green this twice!Car dealers don't hold the notes on the cars they sell.

If too many of the car loans originating from a dealership default, that dealer will no longer be able to obtain financing for its customers.

Dealerships care very much about bad loans. To think otherwise, is to not understand how dealership financing works.

Yes, of course the bank that actualy owns the loan is the one that is on the hook if the buyer defaults. What I meant to agree with was that businesses are there to make money, not to protect individuals.