Behind on car payments because of the Coronavirus? FTC offers help

April 15, 2020

by

Amy Hebert

Consumer Education Specialist, FTC

Are you worried that you won’t be able to make your next car payment because you’ve lost your job or income because of the Coronavirus? Or are you already behind on your payments? You’re not alone. Here’s what you can do:

• Contact your lender now. Some banks, credit unions, and auto financing companies are letting people delay payments or renegotiate their payment schedules. If your lender agrees to any changes, make sure you have them in writing for later.
• Find out what rights you have in your state. Check with your State Attorney General or local consumer protection agency. States have their own rules about how cars can be repossessed and what happens after. If lenders break the rules, they might lose other rights against you or have to pay you damages.
• See if you can refinance your loan. This makes sense if a lower interest rate or longer loan could make your car payment doable. Just make sure you refinance with a credible lender or company. Depending on how much your car is worth and how much you owe on it, you also could look into selling your car or trading it in to get something cheaper before you miss a payment.
• Don’t do nothing. Even if you have to miss a payment, don’t be afraid to talk to your lender to learn about your options. If you miss payments, you could be charged a lot more in fees and hurt your credit. While many lenders have begun to voluntarily forego repossessions during the pandemic, if you get behind on your payments, your lender still could repossess your car — sometimes without warning.

If your car gets repossessed, check your state’s laws to see what options you might have to buy it back or get any personal property left in the car.

You also might still owe money after your car is repossessed. You could be on the hook for any “deficiency” — the difference between what your car sells for and how much you still owe on it, plus any fees related to the repossession. In most states, your lender is allowed to sue you for it. An attorney can tell you whether you have grounds to contest a deficiency judgment.

The important thing to remember — you could have more options than you think, so don’t wait to talk to your lender. The sooner you do, the better the chance you can work something out.

For more, read the FTC’s article on Vehicle Repossession and this blog from the CFPB to learn more.

Maine Insurance Superintendent Alerts Consumers and Businesses to Flood-damaged Vehicles in Aftermath of Superstorm Sandy

 GARDINER – Insurance Superintendent Eric Cioppa cautioned consumers and businesses on Monday to be alert for the possibility of flood-damaged autos in the aftermath of Hurricane Sandy. Although the October superstorm did not result in significant damage in Maine, many Northeastern states experienced wide-spread storm surges and flooding.

“According to the National Insurance Crime Bureau’s estimate, more than 250,000 vehicles were damaged by the storm,” Superintendent Cioppa said. “This estimate includes only insured losses, so many more autos may have been impacted. Damaged vehicles could be for sale in Maine right now.”

The Superintendent emphasized that it’s more important than ever to do research when buying a car or truck. Vehicles suffering storm damage, even after repairs and cleaning, can pose safety risks and may require substantial repairs down the road.

If the damage is great enough, an insurance company will “total” the vehicle and pay for its actual cash value, less the policy’s deductible. Alternatively, if the insurance company agrees, a vehicle owner may choose to keep the auto and receive its value less the salvage value.

Maine law requires an insurer to obtain a salvage title when it declares a vehicle a total loss, and the vehicle may not be operated on the road until it has been repaired, inspected, and rebranded with a title indicating “rebuilt salvage,” “rebuilt,” or “repaired” by the Maine Bureau of Motor Vehicles. However, sellers can sometimes conceal damage by moving a vehicle and its title to other states, a practice known as “title washing.”

“Severely damaged vehicles may appear for sale in Maine without any indication that they were affected by Sandy,” added Cioppa. “Even new cars could have sustained flood damage.”

Cioppa offers the following tips for consumers to reduce the risk of unknowingly purchasing a flood-damaged vehicle:

 * Thoroughly inspect the vehicle for signs of water damage. Look for mud, stains, or musty odors in the interior, the trunk and the spare tire storage compartment.

 * Check the undercarriage for rust or flaking metal.

 * Always test drive a vehicle and have it carefully inspected by a mechanic you trust.

 * Contact the Maine Bureau of Motor Vehicles (BMV) to request a title search. For additional information on titles and title searches, including applicable fees, contact BMV at (207) 624-9000 or visit www.maine.gov/sos/bmv.

* View a detailed title history and damage report from a national database such as CarFax, Autocheck, or Consumer Guide Automotive. There may be a fee to view these reports.

Additionally, consumers can download useful checklists and learn more about flood and salvage vehicle scams, and post-disaster contractor repair schemes, by visiting the National Insurance Crime Bureau (NICB) website (www.NICB.org). The site’s VINCheck allows free consumer access to the vehicle salvage records of participating NICB member insurance companies, which collectively provide 88 percent of the auto insurance in force today.

Maine consumers and business operators with questions about auto, home, business or other lines of insurance are encouraged to contact the Bureau of Insurance by calling 1-800-300-5000 or sending an e-mail to Insurance.PFR@maine.gov.

The Bureau of Insurance is part of the Department of Professional and Financial Regulation (www.maine.gov/pfr) which encourages sound business practices through high quality, impartial and efficient oversight of insurers, financial institutions, creditors, investment providers, and numerous occupations to protect the public.

 

 

Automobile Financing and Purchase Rights as Presidents’ Day Sales Approach

Maine’s Bureau of Consumer Credit Protection Outlines Consumers’ Rights

Agency Offering “Downeaster Guide to Consumer Credit”

GARDINER –  In advance of Presidents’ Day auto sales events, Maine’s Bureau of Consumer Credit Protection is encouraging consumers to evaluate vehicle financing options and to understand their rights.

“For most of us, a new or used vehicle is the second-largest purchase we’ll ever make, second only to buying a home,” said David Leach, Principal Examiner at the Bureau.  “We encourage the thousands of Maine residents who will visit auto dealerships during the upcoming sales to become familiar with financing details and their rights as consumers.”

The Bureau outlined key facts and recommendations to keep in mind when considering a vehicle purchase from one of Maine’s many reputable auto dealers.  Additionally, the agency is making a “Downeaster Guide to Consumer Credit” available by calling 1-800-332-8529 or visiting www.Credit.Maine.gov and clicking on “Consumer Guides.”  It’s a valuable source of information about financing various purchases and dealing with credit in general.

1) Assess your personal finances before you buy.  Understanding what you can afford is an important starting point.  Don’t commit too much of your income and savings at the expense of your household obligations over a four, five or six year auto contract. 

2) Learn all you can about the car or truck you want to purchase.  Various magazines, books and reliable internet sites offer reviews of mechanical reliability, overall owner satisfaction, pricing information, and depreciation rates of cars and trucks.  Many dealerships also list their inventory and prices online.

3) Compare sources of credit.  Contact your local bank or credit union to determine their loan rates for new and used vehicles, and determine the available annual percentage rate (APR) and other credit terms.  Then compare the APR and terms to those offered by the dealer.  Negotiate the vehicle price first, then use the information from lenders to separately evaluate credit plans available from the dealership.

4) Get the best price for your trade-in.  Using print and internet sources, gain a clear understanding of the value of your trade-in to help you negotiate all aspects of the transaction with the dealership.

 5)   Limit the repayment term.  Some dealers now offer 7-year financing.  Consumers should consider whether the vehicle last that long, and avoid financing for longer than its useful life.  While monthly payments may be lower with a longer contract, more interest will be paid over time. 

6) Avoid no-money down financing, if possible.  Making a down payment of at least 20% toward the vehicle’s sale price will help minimize the chance you’ll owe more than it’s worth.  If you need to sell the car, a down payment may help you to break even or even get some equity out of the sale. 

7) Understanding your rights.  The law does not provide a return policy or “cooling off” period for an auto purchase.  Once a deal is finalized, you do not have the legal right to change your mind and cancel the contract.  Make sure you are comfortable with all aspects of a transaction before agreeing to the purchase.

 “Maine has many outstanding auto dealerships that provide excellent service to consumers.  Dealers respect knowledgeable shoppers and are generally willing to work with them to arrive at a deal that is acceptable to both the consumer and the business,” Leach added.  “Buying a car should not be an impulse purchase.”