Ads on TV may promise to modify car loans and stave off a visit from the repo man, but some companies fail to carry through on their promises. Better Business Bureau recommends that cash-strapped consumers save their money by trying to work out a deal with the lender directly before paying out hundreds in upfront fees to a loan modification company.
High unemployment in the country means that many families are struggling to make ends meet and the number of repossessed cars continues to rise. More than 1.9 million cars were repossessed by lenders in 2009 according to Manheim Auctions. Some businesses are seeing an opportunity in the increased number of repossessed cars and claim that, for a large up-front fee, they can work with the lender to modify the terms of the loan for the borrower.
“Auto loan modification companies are following in the footsteps of unscrupulous mortgage modification companies which have long targeted struggling families who are just trying to stay above water,” said Michael Clayton, President/CEO of BBB in Southeast Texas. “Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater.”
BBB has received complaints from across the country against one Florida-based company, Auto Relief Group (ARG).Complainants say they paid hundreds of dollars in advance fees in exchange for the promise that ARG would significantly reduce the monthly payments on their car loans. Complainants wanted their money back after the company was unsuccessful in modifying the car loan. ARG has also caught the attention of the Florida Attorney General who has filed a lawsuit against the company for deceptive and unfair trade practices
If you’re having a hard time making payments on your auto loan and are considering assistance from a loan modification company, BBB recommends that you:
For more advice on managing personal finances, visit us online at http://southeasttexas.bbb.org/consumer-tips-finance/