When my firm prepares and revises budgets for clients with financial related problems, I am always sensitive to someone's car payment. Many of my clients are locked into terms with high interest and high payments and feel stuck and victimized from the car buying process. This is often made worse if the car is unreliable too!
While filing bankruptcy provides options for that "bad deal" like modifying a loan in some cases or surrendering a car through filing bankruptcy, it is still important to be sensitive to a dealer's predatory tactics before you sign.
One of these dealer tactics is the "yo-yo" where dealers let buyers drive a new car home in hopes of locking them into a deal and later tell them their financing fell through. Here, consumers get locked into that bad deal without even realizing what happened.
Many have argued that some of these dealers tactics, like inflating a car's value is identical to what the banks and mortgage companies did in the financial crisis. Now, Wall Street is buying bundled sub prime auto loans too.
Consumers need to be aware, after heavy lobbying by car dealers, that the new Consumer Protection Agency is largely exempt from overseeing car financing. This means that even though a car is one of the largest purchases that many Americans will ever make, consumers are still not getting critical terms disclosed to them, like other industries are forced to do.
If you have questions about car financing, budgeting or financial distress issues, do not hesitate to contact us for advice.
Please see the video and article below for some insider tips!
Lee M. Perlman, Esquire