How to Avoid a Poor Credit Car Loan Modification Scamby Steve Cypher on Sunday, January 20th, 2013
When it comes to auto loan modifications, most consumers with car credit problems could be taken for a ride.
At Auto Credit Express we’ve been helping car buyers with poor FICO scores find new car dealers that can give them their best opportunities for approved auto loans. And while we haven’t come across this issue, according to a recent article from the Federal Trade Commission there are scammers out there advertising programs that, for a fee, will modify the auto loans of people who are having difficulty making their car payments.
Car loan modification scams
These companies make some or all of the following claims:
• They have close relationships with consumer lenders
• They can significantly lower your monthly car loan or lease payment
• They can help you avoid repossession
• If they can’t make a deal for you, they’ll refund your money
According to the FTC (which has sued a number of these companies) the promised loan modifications were never done, customers never received refunds and, in many cases, the lenders were never even contacted by the companies.
The experiences of scam victims
The victims of these scams shared much of the same results:
• After paying a fee for the promise of a loan modification, nothing was done as promised
• The scammers often added to the problem by telling clients to stop making car payments while they were in negotiations with lenders
• Some learned that nothing was being done only after being told by their lender that their vehicle was about to be repossessed
• In some cases scammers demanded additional fees to continue working on a client’s case
What the FTC recommends
If you find yourself falling behind on your car payments, the Federal Trade Commission has these suggestions:
• Contact your lender directly to discuss your options as early as you can
• The longer you wait to call, the fewer options you will have
• Typical auto loan modifications involve deferring missed payments to the end of the loan or extending the term to reduce payments
• Any loan modification will also increase the amount of interest you’ll pay
• Creditors will rarely reduce the amount of the principal or the interest rate for an auto loan modification
How to report fraud
If you’ve been taken for a ride by any auto loan modification program you should file a complaint with the Federal Trade Commission at ftc.gov or by calling their toll-free number at 1-877-FTC-HELP (1-877-382-4357). You should also contact your state Attorney General.
As we see it
If you’re having trouble making payments on a bad credit auto loan or any other type of loan, contact the lender as soon as possible. As for loan modification programs, it’s always important to remember that if something sounds too good to be true, it probably is.
Another thing to remember: Auto Credit Express matches applicants that have auto credit issues with dealers that can arrange for auto loan approvals.
So if you’re ready, you can start now by filling out our online auto loans application.