Watch Out For Auto-Loan Rip-Off As Politicians Look The Other Way
A disturbing lending practice is happening and politicians are turning the other way. (Wait towards the end to see the politicians’ response – what a joke!) Consumer Advocacy groups are warning against national name brand chains that are charging customers as much as 189% interest for car repair loans.
The Denver Channel reports – “Consumer advocacy groups are warning about loans with interest rates as high as 189% at national car repair chains. A group sent letters this week to chains including AAMCO, Precision Tune Auto Care, Big O Tires, Midas, Grease Monkey, Jiffy Lube and Meineke. They are urging shops to stop offering financing through EasyPay Finance, which runs the loans through Transportation Alliance bank.”
Here is what happens – most states have an interest rate cap that prevents lenders from issuing predatory loans. However, banks are exempt from these caps. A company like Easy Pay will find one of these banks to let them run the high interest rate loan through.
Of course, a consumer with a repair and no money will sign anything to keep their car running. These auto repair companies are taking advantage of people in vulnerable situations.
Congress has the “answer.” There is a bill being considered that caps the rate at 37% nationally. They say that will fix the problem. No, it creates another more widespread abuse. Given this bill passes, creditors will have the ability to raise rates to 37% (which is predatory in its own right).
It is amazing that the politicians don’t think that 37% won’t lead to a debt trap.