Consumers with poor credit considering a car loan modification should first check out what the FTC says could happen
What we know
When contemplating an auto loan modification, borrowers that have experienced problem credit are taking the chance that they could be taken for a ride – and not a good one at that.
Here at Auto Credit Express we realize this because we’ve been helping car buyers with bad credit searching for online auto loans locate those new car dealers that can offer them their best chances for auto loan approvals.
But even during the credit repair process, at least according to a recent article from the Federal Trade Commission, there are scammers out taking advantage of people who are having difficulty making their car payments.
Auto loan modification scams
The article states that 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 victims of these con artists shared many 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
If you find yourself falling behind on your car loan 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
If you’ve been taken for a ride by a car loan modification program consumers should file a complaint with the Federal Trade Commission at ftc.gov or by calling a toll-free number at 1-877-FTC-HELP (1-877-382-4357). They should also contact their state Attorney General.
The Bottom Line
Borrowers that find themselves with problems making payments on an auto loan should 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 good tip: Auto Credit Express matches people that have experienced problems with their auto credit with new car dealers that can offer them their best opportunities for approved auto loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online auto loan application.