I met a young man here these past few weeks. He is like many young men in these parts; strong, polite, professional, hardworking, and a manual laborer. He is smart and very skilled in many technical trades including welding of all metals, refrigeration, and an excellent painter of boats and small aircraft. Unfortunately he has little in the form of post high-school education.
We were talking motorcycles since he drives a beautifully maintained 2008 sport bike. He rides it to work every day and the bike itself glows with the care of a proud owner. But he told me he wished he didn’t own it. That made no sense to me so I asked. Turns out that he bought it new in late 2008, made every payment, and trying to pay it off early to avoid the high cost of borrowed money he paid extra every month, sometimes a few dollars, often a hundred, and sometimes after completing a large paint job, several hundred. Smart approach, yet now after four years of ownership he owes as much as the purchase price. How?
Well as a new owner, young, excited, happy to finally have gotten his bike delivered, he signed all the documents and really didn’t pay the level of attention required. In the end, he was charged twice for the delivery and setup, a significant finance charge hidden in the fine print, and of course even deeper in the documents was some specific wording as to if and how one desired to make additional payments to the principal he had to clearly designate in writing his intent with each individual payment. Oh and there is some type of general no-recourse legal ease disallowing any challenge to the double up front charges he paid once the documents were signed, which were of course tacked onto the loan. Where did the extra money go? The finance company posted it to future, yet un-accrued interest, yes their yet unearned profits as is often the “standard” practice with some banking institutions.
I put myself through college several times so could easily argue it is his fault for not being better educated, his fault for not reading, and understanding the fine print. As a person who has done well, retired at the age of 49, lives on his yacht traveling between the US and the Caribbean, it would be easy to support the perspective of what folks now refer to as the 1%, argue they have worked hard, earned, and deserve the pay, perks and bonuses taken by the bankers and financiers of the day. But I can’t.
Being smart, having money, owning the bank, having the power to influence how the rules are written does NOT give you the right to essentially steal from someone who hasn’t for whatever reason gotten the same education or breaks as you. I don’t care if you’re a democrat, republican, independent, conservative religious right or far left liberal; this is wrong. And taking someone’s hard earned money as your own profit just because he doesn’t understand your fine print or technical details is indeed stealing. With undergrad and graduate degrees in business, I know what the law says, but how about intent? Why would you THINK he’s paying more? Because he thinks the bank didn’t get enough out of the loan terms? Hardly.
What to do now is the question. The bank has sold out to a different financial institution this year. The new owners bought all the paper and fairly expect the terms to hold and this situation is certainly not their fault. The old boys have indeed taken their profit and ran. So I’ve offered to give the documents the best “fine print” review I can and see if there is something. I know through my own financial dealings, the new organization to be fairer and more considerate than what he has dealt with. Maybe an appeal for their good will. At the very least, the young man now knows how the rules of the game are tilted, and can play the game to minimize his disadvantage. Maybe he’ll have to settle for the education he has received from this event and the extra couple years he’ll pay for his error. But it really doesn’t have to be this way. The rules can be written differently so the participants in the deal are equal, and the disclosure done in a way that there are no surprises to the parties in the agreement. Again back to intent; can anyone out there actually believe the young man instead of paying extra on his loan, simply wanted to donate extra money to the banks coffers? Again hardly.