Beware auto loan modification scams
"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," Delaware chapter president Christine Sauers said. "Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater."
Manheim, an international reseller of vehicles, says in its used car report that 1.9 million vehicles were repossessed in 2009; it expects that rate to drop slightly in 2010.
BBB has complaints nationwide against one Florida-based company, Auto Relief Group. Some consumers allege they paid hundreds of dollars in upfront fees to get their monthly payments reduced, but that didn't happen. That same company has been sued by the Florida attorney general's office.
Before you enlist the services of an auto loan modification company, the BBB recommends that you:
- Start with the lender and see if a more convenient payment plan is available.
- Check out the company with the local BBB chapter which can tell you if there are any complaints, government actions or lawsuits against the business.
- Ask about advance fees. Some states don't allow companies to charge upfront fees for financial services and requiring money first should be a red flag even if the company offers a money-back guarantee.
- Get the deal in writing and make sure the company tells you what its services are and its terms including refund policies.