With GPS/always on mobile data connections, the lender has a much easier time reclaiming the collateral and recouping their losses by selling or leasing it again.
Here is their business cycle:
1. Purchase a used car from a customer for 80% of "fair market value."
2. Sell the car on a $0-down, 7-year note for 110% of "fair market value."
3. Undoubtedly the loan goes into arrears, and the dealer will disable the ignition system after a certain amount of time. The "owner" will be billed for the tow as well as multiple "recovery fees."
4. Sell the car again for 110% of "fair market value."
5. Repeat.
Multiple times I have been told "we don't want them to pay off the car; we make less money that way."
I remember one particular dealer bragging to me about the fact that he had sold a 2009 Honda Civic 11 times in 4 years. That is, 11 sales and 10 repossessions over the course of 4 years. The saddest part was hearing that over 70% of their car notes would go into arrears within 4 months.
It's wired directly into the ignition system. Despite having a computer engineering degree and enough experience to be reasonably confident in my ability to analyze unknown electronic systems, I spent a lot of time very carefully going through all of the connections to convince myself I wasn't going to brick my vehicle by removing the device. In the end it was pretty easy to yank the device. The hardest part was patching the ignition wire, which had been cut to install the device.
Conclusion from the previous paragraph? It's not that hard if you know what you're doing, but I'd bet that something like 99% of people wouldn't have a clue how to remove it even if they noticed it was there at all.
I recall buying a Honda back in the late 90s. Dealer tried to up sell me on having the VIN etched into all the windows. I declined. Drive the car home and realize it has the VIN etched in all the glass.
The dealer is getting $4K (or more in the cases where they repossess the car and re-lease it) because the buyer often has few options on how to get transportation so they're implicitly forced to take worse terms (say, they need a car immediately to get to their low-wage job otherwise they are fired and forced into worse poverty). Of course, you can still say the car doesn’t have a value until a transaction takes place.
These socio-economics dynamics mean cars have much more of a spectrum of "value" than just one-off car purchases. Framed another way with the parent comment, buyers are often under implicit economic duress, it's just not duress forced by the seller.
I'm not strictly opposed to markets like subprime auto/personal loans, as often these markets would look worse without these options. But a lot of times people see supply-and-demand situations in very limited scope and miss external factors that influence choices.
A perfectly efficient market will push the bids higher and the asks lower. Stocks for example only have a spread of a couple of pennies.
As the markets get less and less efficient, you become more reliant on middle-men to perform transactions. In the dark ages, people would pay 1-pound of gold for 1-pound of salt. In the case of modern society: bonds (and other derivatives) are less efficient to trade and therefore have higher bid/ask spreads than stocks.
Go away from financial instruments, and a 30% spread on bid/ask is actually reasonable. Play Magic: The Gathering? Buying/selling used video games? You're going to pay a pretty large spread.
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"Fair Market Value" is an estimation of the bid/ask spread. There really are two fair prices: the value the buyer is willing to pay, and the value the seller is willing to sell at. These two numbers are all that matters.
By definition, these two prices are fair. Because if they weren't fair, then the buyer (and seller) would reject the deal and the trade will fail.
80% to 110% isn't a perfect split between the buyer and seller, but its "within expectations".
You're doing fairly well if you can get a car dealer to buy your car for 80% of what they sell it for
"I could literally survive the next 10 minutes without buying this" is not the same thing as "if I don't buy this soon, my life will not be significantly worse off."
Poverty's not known for opening up options for people.