Last week we released Auto Loan Complaints Rise, a report looking at vehicle loan and lease complaints in the Consumer Financial Protection Bureau’s (CFPB’s) Consumer Complaint Database. The report is a deep dive into the problems consumers face when buying or leasing a vehicle, and includes dozens of key data points, as well as powerful consumer stories from the database.
Here are three key takeaways from the report:
Auto Loan Complaints Rise shows that rising debt and predatory behavior by dealerships and lenders are reflected in the CFPB’s Consumer Complaint Database, which now contains more than 20,000 complaints about issues with vehicle loans and leases. We found complaints describing, in consumers’ own words, troubling problems including deceptive loan terms, abusive debt collection, and “yo-yo financing,” in which dealers change loan terms after a buyer has already driven off the lot. And many of the most complained-about companies have been the subject of legal actions by state and federal agencies for their mistreatment of their customers.
These problems facing consumers are playing out in real time in the Consumer Complaint Database. Our analysis found that there were more auto loan and lease complaints in the five month period from March through July than at any other point in the history of the complaint database. And the biggest spike in auto loan complaints has been for consumers saying they were denied requests to lower payments.
After all, cars are inherently expensive and risky investments. And it’s not just loans and leases that harm consumers’ financial health. We found complaints describing how vehicle costs lead to a wide variety of problems such as damaged credit reports, bank overdraft fees, and credit card or payday loan debt incurred to cover repairs and other vehicle costs.
That’s why one of the most important ways to help consumers avoid the financial risks of vehicle loans and leases is to give people more freedom to avoid car ownership in the first place. For the many Americans who need a car to get to work or school, vehicle ownership can be an expensive necessity that requires sacrificing financial wellbeing. Therefore, improving public transit and creating walkable and bikeable neighborhoods doesn’t just improve our transportation system — it also protects consumers’ financial health.
As the COVID-19 pandemic continues to wreak havoc on the American public, consumers need rapid help to ensure that their auto loan problems do not balloon into long-term harm in the form of repossessions, bankruptcies, abusive debt collection, or damaged credit reports. The good news is that by responding to this urgent need for change, we can make consumers better off not just for the pandemic, but also in the years to come.
Photo: Greg Gjerdingen via Flickr