Detroit is filled with predatory lending businesses that prey on the fact that people don’t have many options.*lack of strong economy for many decades.* These places lure people in with promises of no credit checks and low down payments, while charging absurdly high interest rates, reaching upwards of 20%. These businesses also price cars for far more than their value. Since it’s so difficult to get around the city without a car, people unfortunately feel like this is their best bet. The average car note payment in Detroit is $495/mo.
Along with high interest rates on auto loans, Detroit is also known for notoriously high auto insurance rates as well. The average rate for auto insurance in Detroit is $450/mo. It is illegal to drive without auto insurance in Michigan, and you cannot register your car without it, so people have no choice but to pay the high rates. Detroiters car note and insurance payments can be equivalent to rent in other places in the country. That doesn’t even include gas and upkeep for the vehicle.
L.A. Insurance is known for offering short term policies for 7 or 13 days. While Michigan outlawed 7-day insurance, 13 days is still available. These short term policies are extremely predatory as well. The policies were sold for hundreds of dollars, depending on the quotes, for just one week. Salespeople convinced customers that the one week was a “better deal” to pay a lump sum just to register the car, as opposed to paying a high payment every month. When in actuality, customers paid a lump sum to register the car, and not be protected if they get in an accident a month later. However, this protection is only applicable if you get pulled over. Michigan is the home of “no fault insurance,” where essentially, if you are in an accident, it's not your fault, so the insurance company is not obligated to pay.