The economy has been hard on many drivers and made it difficult for many of them to make the required payments on their auto loans. Many lenders have tried to work with their consumers to modify the terms of the loans to make it easier for them to make their payments. Unfortunately, a number of scam artists are taking advantage of customers who are struggling to make their loan payments.
A number of companies will charge consumers upfront fees for auto loan modifications that they will never complete. Many companies also reneged on their promises to refund their money to customers if they didn’t successfully complete their loans. Don’t take any promises from a company at face value.
The Federal Trade Commission has filed injunctions against two companies that have engaged in these practices. However, regulators will not be able to stop all companies engaging in these kinds of fraud. As a consumer, you will need to be diligent about protecting yourself from these types of fraud.
Here are some things you should keep in mind before ever trying to modify the terms of your auto loan:
- Third party companies are simply going to be the middleman between you and the financial institution that holds your loan. Try to work directly with the lender to develop a new repayment plan.
- Never pay for these services up front. According to the FTC, most companies that charge fees up front are not legitimate.
- Be wary of any unsolicited calls from companies claiming to help you restructure any loan.
- Make sure that you understand the terms the company is offering and what services it will provide.
- Insist that everything is provided in writing.
- Don’t work with any company that guarantees that your loan will be modified. They are working with your financial institution and can’t possibly guarantee how your financial institution will respond.
- Try to check the firm with the Better Business Bureau. However, you should be cautious with this approach. The BBB can only go by the reports that are filed with it. They can’t tell you how reputable an organization if they haven’t received any complaints from any dissatisfied customers. However, it is still a good reference to check.
In addition to scamming some customers out of their money, others have encouraged customers to engage in illegal activity. According to the FTC, some of these firms actually instructed customers to refuse to make payments to their lenders. In some cases, they even told them to hide their vehicles in case a repo team went to repossess them.
Many consumers have been victims of these services. After the 2008 financial crisis, many consumers have had a difficult time repaying their loans. Customers are always encouraged to work with a financial institution to reduce their interest rates or pursue a more favorable payment term structure.
However, you should be very careful with which companies you work with. Many unscrupulous firms have tried to exploit individuals who are struggling to make ends meet in the face of a major global recession. Don’t let them claim you as their next victim.