The need for transportation to get
to work, and other important appointments can make a car a necessity.
Some lenders exploit that need – approving borrowers who can't
afford their payments. They set their borrowers up for failure, late
fees, and penalties.
Sub-Prime Auto Loan Tactics
Several years ago, sub-prime
mortgages were big news as the bubble burst. But that's not to say
lenders learned their lesson. Instead, they changed their focus to
auto loans.
The tactics are the same. Car
dealerships inflate prices far above market value. Then they add on
up-charges like warranties and charge exceptionally high interest
rates. When the buyer falls behind, the lender tacks on penalties and
late fees that drive the cost up even more. Then they turn the
accounts over to collections
agencies which harass the buyer to get them to
pay.
A Cautionary Tale
Consider The
Liblang Law Firm's client, Chris. Chris is a
cancer patient who needs a vehicle to get to doctors. She bought a 12
year old Dodge Durango, with an accident and almost 170,000 miles in
its history. It was worth $4,750, but the dealership charged her
$7,500. The dealer then convinced her to purchase a $2,200 warranty
on the vehicle. The dealership offered Chris a loan with an interest
rate of almost 24% spread out over 4 years. All together, the cost of
the SUV was $14,584, nearly $10,000 over market value.
Just two months after she bought the
car, she found out there as a problem with the engine that would cost
$5,600 to fix – more than the value of the car. What was worse, the
warranty would only cover a small portion of the cost.
That's when she turned to attorney
Dani Liblang with the Liblang Law Firm. Dani is a consumer law expert
with 30 years experience helping consumers fight back against
dealerships who sell them lemons at high prices.
"They’re
upside down from day one because of the inflated price," said
Liblang. "Secondly they’re being charged just horrendous
interest rates."
The sub-prime auto loan is gaining
popularity. Auto dealers don't care what happens after the car is sold
as long as the bank makes a profit and they get their commission. Nor
are they concerned with the quality of their warranties. Some sales
associates don't even know what is covered by the products they are
selling.
That's why Attorney
Dani Liblang encourages consumers to stay away
from sub-prime lending. Do your budgeting and know what you can
afford to pay before you start shopping. If possible, seek an auto
loan from an independent lender, like your bank or credit union. And
if you do get caught up in a sub-prime auto loan scheme, contact
The Liblang Law Firm, P.C., to help you protect
you from the collectors' predatory lending strategies.
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