Car Loan Scams - Auto loan
While scammers target homeowners during the housing crisis, the car loan scams are starting to attract the attention of watchdogs of government.
A popular car loan scam perpetrated on car owners who hope to avoid having their car repossessed, but it is not the only know how to spot and other deceptive practices that car buyers are facing, and what to do about them.
car loan scams are front and center from March 2012 when the Federal Trade Commission's first two cases to stop the car loan modification scams, the FTC filed a complaint against hope for car owners LLC, and Kore Services LLC, doing business as Auto debt Council, the United States district Court, Eastern district of California and received a permanent injunction against hope for car owners in December.
According to the FTC, the hope for car owners charge consumers 200 to 500 and promised to reduce their monthly payments car loan from 30 percent to 50 percent of Auto Board responsible consumer debt 350-799 and promised car loan payment cuts of 25 percent to 40 percent.
The scams are similar to mortgage loan modification scams, scammers tell customers they could stop their car to be repossessed and could reduce their payments, said Gregory Ashe, senior staff attorney with the Office of consumer protection at the FTC.
It is clear that the name Hope for car owners is a play on the hopes for the program owners of the government, implying some relationship with the government, but no government programs exist to car owners, said Ashe.
Ashe said that the scammers usually tell consumers to stop paying their car payment and not to talk to their lender The scammers say they will be in contact with the auto finance lender, but they do nothing or do that an initial contact.
We have a rough estimate that these two companies have almost total 662 000 of about 2200 victims, said Ashe.
Ashe said repossession can occur after only two or three months of nonpayment.
To avoid becoming the victim of a car loan modification scam, the FTC recommends contacting your lender directly as soon as you realize you will have trouble making your car payment longer you wait to call, unless options you will have available.
Auto lenders generally do not drop interest rates or reduce the principal balance on a car, said Ashe If relief is to be had, it is usually to extend the term of the loan to reduce your monthly payments or to defer payments missing at the end of the loan you will pay more over the life of the loan, so there is no real savings, but at least you have a chance of your payments offering car.
While the FTC has drawn attention to the loan modification scams, car loan scams target consumers at the beginning of the car buying process too.
The Center for Responsible Lending reported in April 2012 that his study of five organizations that help consumers to automotive financing problems found that about 27 percent of these complaints involved organizations received funding yo-yo yo-yo scam occurs when a car dealership lead a buyer to believe that funding is ultimately accept an exchange or a down payment and allows buyers to leave the dealership with a new car.
Days or weeks later, the dealer will call the buyer and that funding fell through and the buyer needs to come back and sign a new contract, usually with less favorable conditions LCR says these scams target often consumers with fewer financing options because they have bad credit or no credit profile.
If t doesn financing through the dealer may require you to find another funding at a higher interest rate or ask you to return the car, said Christopher Kukla, a senior counsel of government affairs with the CRL Durham, NC the distributor may charge you for the wear of the car or even a rental fee per day during the time you had the car if you choose not to refinance.
CSF reports that some consumers say they have been denied the return of their payment or have been told that their trade is not available if they try to return the new car in every state Yo-yo financing is illegal, says Paul D Metrey first regulatory consultant for financial services, private and fiscal life with the national Association of car dealers in McLean, Virginia.
It is important to distinguish between the fraudulent financing yo-yo and legitimate conditional sales or time deliveries, said Metrey There are millions of car sales transactions each month, and most are conditional sales, pending loan approval a funding source.
To avoid yo-yo scam, consumers should shop for a car loan to several sources, including a credit union, bank, car online lender and the dealer said Eric Hoffman, spokesman for Americans knowledgeable about the automotive retail economy in Washington DC.
financing dealers on site based on the fact that you are providing accurate information such as credit and payment and your income, Hoffman said to be as honest and as specific as you can be, and see if the dealer financing complies other finance offers.
Kukla says consumers should realize that they have the right to bring home financing documents to read before signing.
In addition, you can tell the dealer that you will not take the car home until funding is final, said Kukla.
The FTC took administrative action against four dealers for the truth violations Loans Act because dealers were not clearly explained to consumers that when they offered to repay the balance due on a compromise, they actually took fairness and application of new negative balance of the car loan borrower Some customers complained that they did not know until they signed their new car financing documents.
Consumers should carefully read the document before signing it, because it doesn t matter what's said it matter what is written, said Ashe If you do not understand something, don t sign.
Kukla says consumers often feel forced to buy additional products, such as an extended warranty, gap insurance, rustproofing, tire rotation and service contracts when they buy a car.
Some of these items are beneficial and some are not, said Kukla The dealer will offer to wrap these items in your loan, but they can be cheaper elsewhere.
Kukla recommends that car buyers do their research and take an offer from the dealer to compare the prices available from a trade union or a credit bank.
We have become used to buy a car the way we buy everything else, purchase and take home the same day, said Kukla Consumers should always take advantage of their right to take their time.
Scam How to detect a car loan modification, loan modification scams, loan modification scams.