By Joy Wiltermuth
A stack of hospital bills and about $7,000 in debt on a used 2013 Toyota Corolla were all that remained of his papá.
In July, an immigrant laborer in Arkansas lost his father, who had been a poultry-plant worker, to COVID-19. The 30-year-old son also contracted the deadly disease, ended up hospitalized but survived. However, the illness cost him weeks of pay, while he battled for his life against the infection.
Now, the man, who declined to use his name for this article for fear of potentially losing his job and jeopardizing his U.S. legal status, is back at work, in manufacturing near Springdale, Ark. He is one of an estimated 55 million essential workers on America’s frontlines, and he doesn’t know how long he can keep paying the loan on his dad’s Corolla at its 16% interest rate.
“It’s all my dad left,” he told MarketWatch via an interpreter. “I can barely make the payment.”
“It’s one of the issues that’s been compiling into a big crisis,” said Margarita Solorzano, executive director at the Hispanic Women’s Organization of Arkansas, a 20-year-old nonprofit in Springdale, which has provided emergency aid to families struggling to make car payments, keep up with rent and put food on the table, seven months into the the global viral outbreak.
“Owning a car is a must,” she said.
Springdale is an industrial hub tucked in the state’s northwest corner with about 81,000 residents. It also sits deep in the Ozarks, where many workers earn minimum wage and public transportation remains scarce. Hispanics make up nearly 40% of the town’s population, a far greater proportion than most any other part of the state. But in a lot of ways, Springdale also could be any town in America — where the toll of the worst public-health crisis in a century has hit Latinos, Blacks and other ethnic minorities the hardest.
“A lot are considered essential workers,” Solorzano said of families in northwest Arkansas seeking aid from her group and others, which aim to help families hurt by the economic and public-health shocks of COVID-19, particularly where federal aid has fallen short.
Several auto dealerships peppered throughout the town offered initial loan extensions to borrowers facing hardships, according to Solorzano, but so-called buy-here, pay-here subprime lenders often repossess vehicles quicker than other lenders.
Then there’s the man who’s been making payments on his dad’s Toyota, even though he’s unsure he can claim title to the vehicle, since it’s not under his name. The dealer who sold the car to the family a few years ago hasn’t been helpful, he said.
“Right now, they are close to paying for the car,” Solorzano said, adding that she’s been working with the son and his mother try to find ways to keep the car. “But since no one else is on the contract, they are wondering what will happen.”
Families often find out the hard way that auto debt can fall into an administrative morass similar to the one that ensnared millions of homeowners during the 2007-’08 financial crisis.
Rosemary Shahan said paperwork problems, including delayed vehicle registrations and title woes , can leave unsuspecting buyers in the lurch down the road. It’s often those who relied on dealerships to take loans out on used vehicles, something Shahan, a consumer advocate who founded California-based nonprofit Consumers for Auto Reliability and Safety in the 1980s, never recommends .
Those problems often get worse during downturns.
Shahan pointed to a vicious cycle of predatory auto lending and repossessions that has been around for decades. “Now it’s on steroids,” she told MarketWatch. “People will go without food and the medicines they need to hold on to a car.”
Government studies show that essential workers have been coping with higher odds of contracting the virus and dying because of their jobs , but also with the fear they’ll bring it home to their families.
Some of Springdale’s largest local employers are a school district, Tyson Foods /zigman2/quotes/201117502/composite TSN -0.02% , which is based there, and retail giant Walmart /zigman2/quotes/207374728/composite WMT -1.59% , founded about 40 years ago in the town of Rogers, which is just about 10 miles north.
In the early months of the pandemic , COVID-19 ravaged U.S. meat and poultry plants, forcing many to temporarily close. That prompted a national food-shortage scare, compelling President Donald Trump to sign an executive order to keep workers on the line and meatpacking plants open.
Months later, COVID-19 continues to create gut-wrenching problems for poultry-plant workers in particular, said Albious Latior, an advocate for Springdale’s large Marshallese community .
Marshallese are Pacific islanders who immigrated to Arkansas after the U.S. in the 1980s granted free travel and work privileges to citizens of the Marshall Islands.
Many work in the poultry plants, earning starting wages of about $13 an hour, but often also pay up to 20% interest rates on marked-up used vehicles, which have gone through multiple cycles of repossessions with previous owners, Latior said.