Denial of auto loan relief leads to spike in consumer complaints

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Financially-stressed Americans driven to file grievances with the CFPB during COVID-19 pandemic

WASHINGTON — An analysis of consumer complaints published by the Consumer Financial Protection Bureau (CFPB) shows that as millions of Americans remain out of work due to the COVID-19 pandemic, complaints about problems in obtaining auto loan relief are skyrocketing.

Americans filed about 2.5 times more complaints about those loan issues in March through May of 2020 than during the same three months in 2019 — an average of 27 complaints per month versus an average of more than 70 per month.

“The CFPB’s public consumer complaint database paints an ugly picture of the challenges faced by Americans trying to keep making car payments when they’re out of work during the pandemic,” said Ed Mierzwinski of U.S. PIRG Education Fund. ”While some auto lenders are working with consumers, it’s clear that the CFPB needs to stand up for consumers and crack down on uncooperative lenders.”

At the start of the pandemic, many lenders offered consumers relief from auto loan payments. Some allowed borrowers to skip payments. In May, the Wall Street Journal reported that millions of Americans had sought such relief. But if entries into the CFPB’s Consumer Complaint Database are any indication, many Americans are running into problems when they try to reduce or defer auto loan payments as the coronavirus pandemic drags on into its fourth month.

Policymakers can do more to protect consumers. Federal policy makers have considered, but so far not enacted, a national repossession moratorium. Some states have urged auto lenders to voluntarily eliminate late fees and suspend repossessions. States can do more and the National Consumer Law Center offers detailed advice for state policymakers.  Also, the CFPB should take enforcement actions in response to these complaints.

“The Consumer Complaint Database is a canary in the coalmine for consumer problems in the financial marketplace,” said Gideon Weissman of Frontier Group.  “The spike in auto loan complaints is a signal that consumers are struggling and many lenders are not coming to the rescue.” 

Many consumer complaints are published with narratives, the stories behind the complaints, in the consumers’ own words. Many from recent months describe being denied relief in the face of pandemic-related financial hardship. They also describe harassment, impenetrable customer service, and damaged credit reports.

On June 2, a consumer wrote: First Investors Servicing will not work with me on payment extension, lowered payments, deferment. I informed them I was fired due to Covid 19 awaiting unemployment claim approval and unable to make my payments… I had to borrow money from my retired mother to make a payment as they keep calling emailing and harassing. (Complaint ID: 3678727)

On June 8, a consumer wrote: I lost my job due to COVID-19, I have tried REPEATEDLY to get Automotive Credit Corp to defer or extend my payment which they refuse to do, I understand they don, t have to but considering the situation I was hoping for a small break. They tried to repo my truck without sending me any notice of default, or right to cure. They will not work me in anyway. (Complaint ID: 3688149)

On April 22, a consumer wrote: I was 2 months behind on my car payment due to a shutdown of my. Job related to Coronavirus. When I received my Stimulus Check, it was used to pay my missed car payments. I have emailed Santander Bank numerous times asking for a lower interest rate and lower payment amount, Well Santander reported me to Credit Bureau and stated I was 30 to 60 days late. I have paid my car on time of {$330.00} per month for 3 years and the remaining balance I owe now of {$4000.00} is interest payments. (Complaint ID: 3617035)

These complaints are just the latest indication from the Consumer Complaint Database data that consumers are struggling during the COVID-19 pandemic. Over the last three months, U.S. PIRG Education Fund and Frontier Group have documented record complaint volumes, and a variety of complaints describing abusive behavior. 

Consumer tip:

Consumers having trouble paying their auto loans should contact the lender and ask for a deferral with no late fees and a temporary interest rate deduction. Be sure your missed payments will be added at the end of your loan, not due all at once. A list of lenders offering deferrals and more advice for consumers with difficulty making loan or lease payments is available here