Auto Loans Were Left out of the CARES Act, and People Are Hurting

Source: 
Car and Driver
Sebastian Blanco

The Trump administration has made a point of how the bipartisan CARES Act, which passed in March, has helped average Americans. Whether it was the Economic Impact Payments or the Paycheck Protection Program, there was an undeniable push earlier this year to help the millions of people impacted by the coronavirus. But dig into the details a little bit, and you'll soon see how the CARES Act didn't come close to covering every aspect of financial damage that the COVID-19 pandemic has wrought on the economy.

Case in point: auto loans. Some types of loans were affected by the CARES Act, including forbearance for federally backed loans for some multifamily rental property owners and mortgages, as well as a temporary suspension of federal student loans. But auto loans were not protected in any way. That meant that anyone with an auto loan who missed some payments over the last half-year might have taken a hit to their credit score.

As the U.S. House Committee on Financial Services said in early April, "The CARES Act suspends negative credit reporting for eligible federal student loan payments only, but not for any other loan obligation." Individual auto-loan lenders may have offered some COVID-related relief, but there is nothing in the CARES Act that forced them to do so.

Sharp Spike in Complaints about Loans

Given all of this, it's unsurprising that problems with auto loan debts are exploding. A new report from the U.S. Public Interest Research Group (PIRG) Education Fund found that there has been a "sharp spike" in complaints to the Consumer Financial Protection Bureau (CFPB) related to auto purchasing, leasing, and financing since the beginning of the pandemic. The hard numbers in the CFPB's complaint database show that more than 2800 auto loan and lease complaints were submitted between March and July 2020. That is more than during any other five-month period in the history of the database, U.S. PIRG said.

Since the beginning of March, more than one in five complaints about auto loans or leases have mentioned COVID-19. These complaints were about a number of issues, including being denied auto loan payment relief, changing loan terms, billing problems, and harassing behavior by debt collectors.

Share This Page