Complaints about auto lenders surged during pandemic

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A record number of car owners have complained about their auto lender not offering payment flexibility for cash-strapped families during the pandemic, a report that analyzed government data has found. To add insult to injury, some lenders have tacked on fees for late payments that the customers said were not their fault, the report said. 

Auto lenders said they beg to differ with the report’s findings and that they’re helping their customers keep up with payments during difficult times. 

Still, Americans filed more than 2,800 complaints about their car loans between March and July, according to the report released Wednesday by the U.S. Public Interest Research Group. That’s the largest spike since the federal Consumer Financial Protection Bureau started taking complaints in 2012. 

The report, which also included complaints filed before the pandemic,  said Santander Consumer and First Investors Servicing received some of the most complaints.

“First Investors Servicing will not work with me on payment extension, lowered payments or deferment,” a borrower from Ohio said in a June complaint entered on the CFPB website “I informed them I was fired due to COVID-19 and am awaiting unemployment claim approval and unable to make my payments.”

The borrower said First Investors offered a payment extension initially but took the offer away a few weeks later. “I had to borrow money from my retired mother to make a payment as they keep calling emailing and harassing,” the borrower said in the complaint. 

First Investors did not respond to requests for comment. 

A Santander Consumer spokesperson said in a statement to CBS MoneyWatch that the company won’t comment on the U.S. PIRG report, but Santander “acted quickly to provide borrower relief from the onset of the COVID-19 pandemic.”

“We temporarily suspended vehicle repossessions, granted approximately 730,000 loan extensions and 70,000 lease extensions, provided hardship modifications, and fee waivers and refunds,” the spokesperson said.  

Americans deal with rising debt 01:53

The complaints come as consumers find themselves carrying the highest amount of car loan debt in U.S. history – $1.3 trillion, according to the most recent Federal Reserve data

The Coronavirus Aid, Relief, and Economic Security Act provided mortgage payment forbearance for millions of homeowners, but that feature wasn’t extended to auto loans, most of which aren’t federally backed, as is the case with many mortgages. 

Other auto loan complaints in the PIRG report were filed against at Capital One, GM Financial and Credit Acceptance. The complaints centered on online payments systems crashing, causing borrowers to be assessed late fees, and auto lenders allegedly changing the terms of a loan after borrowers said they had signed the paperwork.

Late fees, even when on autopay

A Michigan driver complained about Credit Acceptance canceling the autopay option on a loan and how it wasn’t caught until two months of payments were due. Credit Acceptance acknowledged the cancellation was a mistake, the borrower said, but the company still repossessed the vehicle. 

“Even if it was accidental, the contract I signed authorized autopay for the entire 48-month duration of the loan and I never canceled the payments and never missed a payment,” the borrower said in the September complaint.

Credit Acceptance did not respond to requests for comment. GM Financial said in a statement to CBS MoneyWatch that it has helped struggling customers by waiving late fees and not reporting missed payments to credit bureaus, among other things. Capital One said in a statement to CBS MoneyWatch that it offers a one-month payment extension to auto loan customers “with an option to renew.”

Auto lenders also are often pushing buyers into unnecessary add-ons to their car loan packges at a time when family budgets are at their most vulnerable, said Lucy Baker, a program associate at U.S. PIRG who co-authored the study. Baker said the complaints show that auto lenders use some of the same high-pressure tactics to sell extras as auto salespeople famously do. 

A lender will sit customers in a room for long periods and purposely make the application process lengthy so it wears on someone’s patience, Baker said. Once the loan is signed, a lender asks the borrower if he wants to perhaps purchase insurance or an extended warranty and “you’re like ‘yeah, sure, I just want to get out of this room’,” Baker said. 

“Buying a car is already a very stressful situation if you don’t already have the money in your pocket,” Baker said. “People have complained about leaving the car dealership crying.”

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