Tag Archives: predatory auto lending

New York’s Julie Menin: Tackling Predatory Car Lenders

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New York’s Commissioner of Consumer Affairs, Julie Menin, is determined to protect New Yorkers from predatory auto lending practices. Desperate used car buyers have been complaining to the agency, after they were cheated by unscrupulous car dealers who charged exorbitant interest rates for cars that often broke down soon after purchase, leaving them with ruined credit, deeper in debt, and without wheels.

According to the New York Times, auto loan debts sink many New Yorkers financially, averaging more than $12,000 — a burden that can prove impossible on an average annual income of just $36,000. Plus dealers commonly tack on high-priced add-ons that inflate the loans, without adding any value.

In response, the Department of Consumer Affairs is developing a “municipal auto loan initiative,” to allow troubled borrowers to get auto loans directly from a number of lenders on more consumer-friendly terms. This innovative approach promises to provide New Yorkers with lower-cost, less risky access to the cars they need to get to work.

The Department is insisting that interest rates on the loans be fixed, at 16% or less, and that any application fees may not exceed $25.

CARS wishes New York and its courageous pro-consumer Commissioner Julie Menin great success. We hope that this innovative new program thrives and helps lift up thousands of New Yorkers who would otherwise fall prey to dealers itching to exploit them.

Read more:

New York Times: New York City Starts Car Loan Program to Curb Abusive Practices

 

 

 

 

 

 

 

 

Car Title Loans — Get a Loan, Lose Your Car

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Thinking about getting a car title loan, to tide you over? Don’t do it — unless you can afford to lose your car. Car title lenders trap consumers in loans they can’t afford, then take their cars.

Warns Tiffany Richardson, a Houston, Texas area nurse who lost both of her cars to a car title lender: “No matter how bad it gets, do not go.” — Texas Tribune, August 23, 2014.

Sometimes they refuse to accept payments made via phone or other means, in hopes you will default. Then they pounce, and grab your car. They make a killing when they get to collect payments from you, plus end up owning your car.

Car title lenders in California often lure consumers into loans bigger then they need. Why?  Because there is no cap on the interest they can charge for loans over $2500. So even if you want a loan of only $600, they will tell you that you should get a bigger loan, over $2500. That way,  they can charge you absurdly high interest rates — and are more likely to end up seizing your car.

Better alternatives:

Borrow from relatives

Get credit counseling from a non-profit credit counselor approved by the Federal Trade Commission who can help you figure out a better way to deal with debt

Sell your car and get a less expensive car, take public transportation, or rent a car while you get back on your feet

Read more:

Texas Tribune / NY Times report “Thousands in Texas lose cars to car title lenders”