Car Repair Loans – Watching out for Predators

Car repairs can be very expensive, even without hidden or unforeseen fees. Unfortunately, some car repair companies will use this understanding to try and scam customers into paying more than they need to. Although most U.S. states have a legal limit on loan interest amounts, a few exceptions can lead to predatory lending practices. Here’s what you need to know about predatory lending regarding car repair loans and what you should look out for when choosing an auto repair company. 

Car Repair Loans – “Rent-a-Bank” Scams

Well-known auto repair companies have been criticized for leading customers to select repair loans with high-interest rates reaching 189%. These brands include Big O Tires, AAMCO, Jiffy Lube, Grease Monkey, Meineke, Jiffy Lube, Precision Tune Auto Care, and Midas. 

Some of these companies have been accused of engaging in a practice known as “Rent-a-Bank,” in which auto repair shops offer loans through a bank without interest-rate limits. Many of the named brands are working with a system known as EasyPay Finance which runs loans through Transportation Alliance Bank (TAB); this is a bank based in Ogden, Utah, a state that doesn’t have high-interest rate limit laws.

Car Repair Loans – Consumer Concerns

Consumer advocates have voiced their concerns about predatory lending practices involving EasyPay Finances. Some customers have alleged that EasyPay Finance and its parent company Duvera Billing Services, LLC make it extremely difficult to pay off loans. Reports state that consumers are given very little time to pay off their loans, resulting in unexpectedly high and unreasonable fees. It’s illegal for loans to be priced at 189% in most U.S. states, but under the “rent-a-bank” scheme, banks located in states without an interest rate cap “export” their high-interest rates to other states which do have a rate cap. 

Preventing Predatory Lending Practices

Unfortunately, this legal loophole lets auto repair companies get away with predatory lending practices, and to prevent yourself from falling victim to a car repair loan scam – it’s important to take extra precautions and know what to look out for:

• Always read the fine print before agreeing to a loan. Double-check the interest rate and pay attention to any details about promotional offers
• Always get a copy of the contract and make sure it matches the agreement
• Try to avoid any loans with a high-interest rate
• Ask for mechanic recommendations from loved ones and check the BBB for reviews
• Search for an auto repair company with the AAA Approved Auto Repair designation

Click to Link To Learn About Car Repossession in Maryland, Understand If Your Rights Have Been Violated. 

Addressing a Car Repair Loan Scam

If you’ve already experienced an auto repair loan scam and want to take action, you can take a few steps to fight for your consumer rights. This loophole has become notoriously difficult to dispute; however, being prepared with legal aid and representation can help you defend yourself against predatory lenders:

• Contact your state attorney general
• Share your story on sites like the BBB or the CFPB Complaint Database
• If there is still time, opt out of any forced arbitration clause 
• Always keep proof of payments and send it with certified mail for proof of delivery. 
• Keep track of your credit report and file a dispute if you notice anything suspicious

If you’ve been the victim of predatory lending practices, a consumer protection lawyer can help you fight for your rights. Our experienced and passionate attorneys at the Holland Law Firm are ready to defend you against predatory lending practices. Contact us today to schedule a consultation with one of our consumer rights attorneys.