There is a continual modification made in automobile lending and few of it may be scams. It is these scams that you should be wary of so that you do not end up taking on a loan that will do you and your finance more harm than good.
This will put you in a difficult situation when it comes to repaying your car loan. Remember, if you are late with your car payments, chances are your car will be taken away from you, no matter how much you rely on your car or truck to get you to the place you want to go.This principle is applicable for all types of loans that you may take from any one or all of these following sources:
- A traditional commercial bank
- Any credit union
- Any other non-banking financial institutions
- Or any online money lending sources such as https://www.libertylending.com/ or other.
If you are facing such difficulties for which you cannot repay your car loan and are worried that your vehicle can be repossessed, you may tend to think that working with a company that claimsthat they can reduce your monthly car loan payment will be a good option. It will save you from repossession of your vehicles.
- Well, most of these companies will charge you a fee up to several hundred dollars up front.
- They will also tout their relationships with a number of consumerlenders.
- They will also significantly bolster their claims with the help of glowing and often untrue testimonials from their “satisfied” customers for who they have reduced the monthly car payments.
A few of these loan modification companies may go even a few steps ahead and claim that they can strike a deal with your creditor to get you some refund on your loans! All these promises may sound very tempting and make you feel they are the best resort to get you out from and manage your seemingly unmanageable car loans.
Warnings of the FTC
The Federal Trade Commission, FTC that protects the consumer rights say that it is very alluring to work with these companies. Their offers and promises seem to be very promising as most of these companies are scam artists. They are actually out there to take your money as much as possible and provide you with nothing in return.
In fact, the FTC has recently sued a few companies. These are the companies that:
- Made such false claimsbut failed to deliver the auto loan modifications that they promised
- They could not even honor the refund policies that they “guaranteed” and
- What is more, they did not even contact any creditors in many instances.
Ideally, all the victims of such auto loan modification scams have the same story to tell to the FTC. The story entails:
- After paying the requisite fee upfront to these scam companies that promised for a loan modification, most of them found that nothing was really done to secure the results that the companies promised to them.
- These scam artists were also found to compoundthe problem by asking their clients to stop making payments for their car loans as they claimed to be in negotiations with the lenders. This affected their credit score even further making the situation worse,
- It was often learnt by the victims that the companies did not do anything only when their creditors contacted to inform that they are thinking of repossessing their vehicle.
- And, in some instances, these scam companies continued demanding additional fees while working on the cases of their clients which is seldom true.
All these scams may sound familiar because they are the most common ones, according to the FTC. All these scam artists make every move just according to the loan modification fraud playbook and the fraud is the same wherein the consumers pay them their fees in advance for their services that are either never performed or not delivered as it is promised.
Rules to follow
If you want to deal with your car loan payments more effectively and efficiently, there are a few specific rules to follow. These ways and loan management way will vary according to the specific situation. A few of these situations are:
If you are behind on your car payments: In such a situation, instead of turning towards a loan modification company you should make it a point that you talk to your creditors directly. You will need to discuss any other available options as soon as possible in this regard. The longer you wait to make the call, fewer will be the options available to you.
The creditors will determine the best modifications to make for your auto loan according to your situation and that will suit your purpose and affordability in the best way possible. A few of the typical auto loan modifications involve:
- Deferring missed payments till the end of the loan term so that you continue with your current monthly payments or
- Extending the loan term so that it automatically reduces your monthly payments making it more affordable for you.
However, in making such choices you will actually increase the total amount paid in the end for your loan in the form of interest, even if the loan comes with a lower interest rate. Remember, creditors will seldom reduce the total amount of the principal or the rate of interest rate as an auto loan modification.
On the other hand, if you do not or cannot make your monthly payments on time for your auto loan the creditor has the full right according to the law to repossess your vehicle. They can do so without telling you in advance or going to the court for that matter.
Apart from that, the law also allows the creditors to sell your auto loan contract to any third party known as the assignee in legal terms. This assignee will now have the same right as your original creditor and seize your car.
Lastly, if there is any fraud, you can file a complaint with the FTC or your state Attorney General.