US sees uptick in auto loan and lease complaints

Posted at 5:48 PM, Oct 16, 2020

Americans are calling out practices at some car lots more now than ever before.

“We found a pattern of abusive and deceptive practices that the auto loan industry has been employing and unfortunately these complaints have sharply increased during the pandemic,” said Lucy Baker, Consumer Program Associate at U.S. Public Interest Research Group (PIRG).

Looking at the Consumer Financial Protection Bureau's consumer complaint database, the U.S. PIRG found between March and July, there were more than 2,800 auto loan and lease complaints. That's more than any other 5-month period.

This includes complaints like not getting auto loan relief, which the CARES Act didn't specify, but some lenders offered to work with customers. Also, complaints about broken payment systems that led to late fees, and issues with loan terms changing or yo-yo financing.

“You go into a dealership, you buy a car you sign on the dotted line, but as your driving away, you get a phone call from your dealer that says, ‘hey the financing has fallen through, I’m going to take your car back unless you agree to pay more or pay a higher interest rate,’” said Baker.

There were complaints about harassment over repossession and debt, as well as expensive add-ons like warranties, insurance, and service plans.

High pressure tactics were another problem.

“If you put somebody in a room for a long period of time, they're going to be so frustrated that they are going to want to get out of there and then you can pressure them into buying these things they don’t need,” said Baker.

U.S. PIRG is pushing policymakers for auto loan relief programs, banning repossession, debt collection and negative credit reporting.

It also has some recommendations for customers: Don't roll an old auto loan into a new loan, avoid buy here – pay here lots, and don’t get focused on low monthly payments. Instead, compare the total cost of the loan including interest paid.

Officials also suggest filing complaints with the Consumer Financial Protection Bureau. It creates pressure on lenders to make things right.