Buyer beware for car loan modifications
Companies prey on fear of repossession
PROVIDENCE, R.I. (WPRI) - Could you deal without your car? If you're having trouble making payments on your car loan, beware if a company comes calling, offering to modify your car loan -- many of these companies are simply not keeping their promises, and stranding drivers with worse debt.
Paula Flemming of the Better Business Bureau tipped off Call 12 For Action to this unscrupulous practice. Auto loan modification companies are following in the footsteps of mortgage modification companies -- targeting struggling families just trying to keep their heads above water.
Flemming said there's been an increase in cars being repossessed due to high unemployment in Rhode Island and around the country. Last year, 1.9 million cars were repoed.
Crooked companies are preying on the fear of repo. A family or individual might get a phone call from a company offering to lower their payments, and "they quickly act," said Flemming.
But if you act before researching that loan modification company, you could find yourself in even bigger trouble -- like a driver given the wrong directions. Some of these companies, said Flemming, don't just fall short on their promises -- they might not even modify the loan at all!
If you're having a hard time making payments, first ask your lender to adjust your payment plan. If you do want to go to a new company, at least do your research, and check the company's reliability report with the BBB.
And always beware of advance fees; it's a red flag, even if the company says they'll give you a money back guarantee.
"You could have initially dealt with your lender and not pay any fees," advises Flemming. "[The crooked loan companies] are digging you further into a hole."
The final common sense check: get everything in writing. Ask the company's rep to send you documentation, a copy of the loan agreement or contract. Make sure it discloses the services they will provide and their terms, including any refund policies.
Paula Flemming of the Better Business Bureau tipped off Call 12 For Action to this unscrupulous practice. Auto loan modification companies are following in the footsteps of mortgage modification companies -- targeting struggling families just trying to keep their heads above water.
Flemming said there's been an increase in cars being repossessed due to high unemployment in Rhode Island and around the country. Last year, 1.9 million cars were repoed.
Crooked companies are preying on the fear of repo. A family or individual might get a phone call from a company offering to lower their payments, and "they quickly act," said Flemming.
But if you act before researching that loan modification company, you could find yourself in even bigger trouble -- like a driver given the wrong directions. Some of these companies, said Flemming, don't just fall short on their promises -- they might not even modify the loan at all!
If you're having a hard time making payments, first ask your lender to adjust your payment plan. If you do want to go to a new company, at least do your research, and check the company's reliability report with the BBB.
And always beware of advance fees; it's a red flag, even if the company says they'll give you a money back guarantee.
"You could have initially dealt with your lender and not pay any fees," advises Flemming. "[The crooked loan companies] are digging you further into a hole."
The final common sense check: get everything in writing. Ask the company's rep to send you documentation, a copy of the loan agreement or contract. Make sure it discloses the services they will provide and their terms, including any refund policies.
