Paying off a car loan was hard enough. Then the pandemic hit.

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:

1. Even before the pandemic, consumers faced rising levels of abusive and predatory behavior when buying or leasing a vehicle.Buying a vehicle has never been anyone’s idea of a good time, as demonstrated by the societal archetype of the used car salesman. But our analysis suggests that a confluence of factors have put consumers at more risk than ever before: Loans have gotten longer and riskier; dealerships face new economic pressure to push customers toward expensive financing and add-ons; and vehicles have gotten bigger and more expensive. These factors have helped push consumer auto debt to record levels, well past $1 trillion nationally.

   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.

2. During the pandemic, Americans struggling with auto loans are not getting the help they need.Almost overnight, the COVID-19 pandemic created unprecedented financial vulnerability for American consumers, yet they did not get a corresponding increase in protection and support. While the CARES Act required certain levels of relief for many home loans, auto loans got no such treatment. As a result, millions of Americans who lost their jobs due to COVID-19 have had to rely on the goodwill of lenders to avoid serious delinquencies or even repossession.

   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.

3. To truly help consumers avoid auto loan problems, we need to fix the transportation system.Auto Loans Rise describes key ways to protect consumers, like guaranteeing loan relief and banning repossessions during the pandemic, as well as permanently closing loopholes that allow lenders to charge exorbitant interest traits. But it’s important not to lose sight of the fact that this system of predatory and abusive lending is built on a foundation of near-universal dependence on cars.

   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