Ads on TV may promise to modify car loans and stave off a visit from the repo man, but some companies fail to carry through on their promises. BBB recommends that cash-strapped consumers save their money by trying to work out a deal with the lender directly before paying out hundreds in upfront fees to a loan modification company.
More than 1.9 million cars were repossessed by lenders in 2009 according to Manheim Auctions. Some businesses see an opportunity in the increased number of repossessed cars and claim that—for a large up-front fee—they can work with the lender to modify the terms of the loan for the borrower.
If you’re having a hard time making payments on your auto loan and are considering assistance from a loan modification company, BBB recommends that you:
- Start with your lender. Lenders are often eager to work out a more convenient payment plan because it’s in their best interest to keep you paying your bill.
- Do your research. If you are planning to enlist the help of a third party to modify your loan, research the company with your BBB first. The business’s BBB Reliability Report will tell you how many complaints BBB has received, if the company has responded to complaints and if there are any government actions or lawsuits against the business.
- Beware of advance fees. Large fees in advance should be considered a red flag even if the company claims to offer a money-back guarantee if they are unsuccessful.
- Get it in writing. Ask for documentation from the company. Be sure it discloses the services they will provide and their terms including refund policies and any money-back guarantees.
- Complain to BBB. If you feel you’ve been misled by a loan modification business, file a complaint with your BBB online. Even if the business is unwilling to resolve the issue, your complaint will serve as a warning to other consumers about that business.
Visit bbb.org for more trustworthy advice on managing personal finances.