Denver vehicle owners, beware. There are some companies that offer auto loan modification services, but in reality, they harm more than help. Even if you are having a difficult time with repayment, you are better off without their services. Read on to find out why.
How Auto Loan Modification Scams Work
Auto loan modification is a service offered to individuals who are struggling to make car payments. If you are late with your payments, you know you would face vehicle repossession. If you absolutely need the car to go where you need to, you will do what you can to postpone or avoid the inevitable. This is where the auto loan modification companies come in.
The company promises to help you avoid repossession by seeking a special arrangement with your lender. The company would supposedly make a deal with your lender in order to significantly lower your monthly lease or car loan payment. As expected, this special service is not free—the service of ‘modifying’ your loan comes with a high price.
At first glance, getting the help of such companies seem like a good idea. The companies themselves appear legitimate. They convince vehicle owners that they are the real deal through glowing customer reviews and claims of relationships with lenders. Others even say that they will refund the fees if they fail to make a deal with the lender.
But according to the Federal Trade Commission (FTC), these companies are bogus and are out to simply get people’s money. Just like with other scams, this one requires money for a service that is not done or not done as promised. The agency has already sued several auto loan modification companies that didn’t modify loans or refund fees as promised.
This is how the scam usually works: after the fee is paid, the car owner will be instructed to stop making payments as the supposed negotiation with the lender is underway. In some cases, the scam artist will ask for additional fees to continue negotiations. Despite the promises and the money paid, the car owner will find out that the company hadn’t contacted the lender and as a result, the vehicle will be repossessed.
How to Deal with the Problem
If you are having trouble with auto loan repayment, don’t look elsewhere for a solution to your problem. Contact the lender and explain your situation. The sooner you acknowledge the problem, the more options you have. It would be easier for lenders to restructure loans rather than handle repossession. Don’t wait until repossession is a real possibility before you act. Your lender may repossess your vehicle without informing you in advance.
The lender may agree to extend your loan term in order to reduce your monthly payments. If you have already missed some payments, the lender may offer to defer missed payments to the end of the loan. It is unlikely that the lender will lower your interest rate or loan principal. Know that the lender will be more willing to work with you before you miss payments rather than after.