Auto loan modification scams are multiplying online as con artists regulated out of the mortgage loan modification market prey on unprotected car loan consumers. Flickr photo.
Ads for auto loan modification scams are all over the Internet. Auto loan modification companies promise to negotiate with lenders to get customers lower car payments — for a hefty upfront fee. But consumer advocates and government regulators say most auto loan modifiers promising lower car payments will take your money and provide little or nothing in return. Consumer complaints about auto loan modification companies are increasing nationwide. In June, Florida’s attorney general shut down Auto Relief Group, a south Florida company that has an F rating with Better Business Bureau.
Auto loan modification: a cautionary tale
Pitches by auto loan modification companies offering vehicle loan modification services claim they have lender connections and expertise to negotiate dramatically lower interest rates or extended payments. WKYC in Cleveland reports that an unemployed student was looking for help with her $420.00 per month car payment when a television ad led her to Auto Relief Group. The auto loan modifier promised to lower her 13 percent interest rate to 8 percent and extend the loan, which would result in a lower monthly car payment of $290.00. They also claimed they often worked with Honda Financial Services, her lender.
Lower car payments never happened
The unemployed student provided her bank account information to Auto Relief Group and agreed to let it take a one-time advance fee of $298 from her checking account. WKYC reports that when she didn’t notice any reduction in her monthly car payment after a couple months, she contacted Honda directly and learned that Auto Relief Group had never contacted her auto lender. When she confronted Auto Relief Group, she was told that the $298 fee was for an “options report” the company provided and that if she wanted them to contact her lender, it would cost an extra $100.
Scammers charge for what you can do yourself
Other consumer complaints about Auto Relief Group indicate the information in the options report is nothing more than what anyone can get from free by calling their auto lender, such as the amount of the loan, the current value of the vehicle, current interest rate, balance, etc. The student in Cleveland also discovered that Auto Relief Group had made two additional $298 withdrawals from her account without her authorization.
Mortgage loan scammers migrate to auto loans
Some financial experts have said that auto loan modification scams are attracting some of the same scammers who modified mortgage loans until regulations shut them down. SunSentinel.com reports that claims on auto-loan modifier websites and ads — “We can help you keep your car, truck, boat or RV!” “Stop repossession and make your payments affordable!” — are almost identical to the promises mortgage loan modification scams once made to property owners facing foreclosure. Many of those promises weren’t kept and homeowners lost their homes and millions in upfront modification fees.
Auto loan modification companies unregulated
New laws that went into effect this year drove away most mortgage loan modification scams. The new laws require mortgage modifiers to get mortgage broker licenses and they can no longer charge upfront payments. But auto loan modifiers don’t need to be licensed, certified or even trained. The Federal Trade Commission is considering a new rule that would prohibit upfront fees for debt settlement services. However, the proposed FTC action would not include auto loan modifications.
So you’re on your own. Consider yourself warned.
The consumer can't do it on their own because they don't know how to or know what to say. There are scams out there, but don't make the consumer think they can do it on their own. Look at mortgage mods, consumers doing it on their own have less than a 5% chance of success than a qualified person to do it for them. The consumer needs to be careful, but don't misleed them to think they will have success because they won't. You get what you pay for.