LOSING your car could be the first step in a slippery slope as one auto loan customer found out.
Now, she says she’s battling homelessness and a lawsuit thanks to predatory dealership practices.
Prospective car purchasers should be warier than ever of shady dealership tactics (stock image)[/caption]
What you see may not be what you get in the contemporary car market (stock image)[/caption]
Illinois resident Erinn Compton purchased a 2014 Chrysler Model 200 in 2023 from a dealership.
The car had 95,000 miles with an asking price that forced Compton to take out a $12,000 auto loan in addition to her $1,745 down payment.
However, the car almost immediately began having problems, forcing her to unsuccessfully attempt to return the car under the dealership’s 30-day return policy, she said.
Necessary car repair bills then began adding up, forcing Compton to choose where her money went.
She was forced to miss two of her monthly payments, amounting to roughly $570 combined, which resulted in her car being repossessed.
This started a chain of events that eventually led to her being unemployed, homeless, and sued by the financing company for $6,000.
“Although my story is complex, the solutions are easy to solve these continuous cycles of burden for any and everyone,” she told USA Today.
Two years later, Compton is substitute teaching, but still struggling with homelessness. Although she’s currently staying with a friend, this wasn’t the case just days prior to her speaking with USA Today.
Her story is emblematic of the battles many young American adults are currently facing.
A report from the Consumer Federation of America has data showing that borrowers 18 to 29-years-old are falling 90 or more days late on auto loans faster than older borrowers.
This contributed to vehicle repossessions hitting their highest level since 2009 with well over 1.5 million reported, jumping an estimated 43% from 2022 to 2024.
This choice to default on auto loans “usually means consumers have stretched everything else that they can in their household,” CFA Director of Consumer Protection and the report’s coauthor Erin Witte told USA Today.
The report says these figures “look alarmingly similar to trends that were apparent before the Great Recession,” the name given to the severe global economic downturn triggered in part by the American housing market collapse of the late 2000s.
DODGY DEALERSHIPS TO BLAME?
CFA sent its report to members of Congress earlier this week, asserting that “exploitative practices” by dealers and lenders conspiring against consumers are to blame.
How to spot add-on fees at the dealership
The Federal Trade Commission is cracking down on dealerships that charge buyers unfairly.
However, as many transactions aren’t spotted due to electronically signed documents, many added-on fees aren’t spotted. Here’s how the agency says you can spot them.
- Demand a physical copy of the sales contract or invoice, and read it carefully. Customers aren’t required to pay for add-ons they don’t want, like nitrogen-filled tires, paint protectant, wheel and tire insurance, etc.
- Be sure you understand the total cost, not just the monthly. Make sure the total cost is in writing so you can get an idea of how other fees play into the monthly fee. If it’s different from what you originally agreed on, the dealer may be adding fees.
- Explore your options for financing. First, check with your bank, as they can give better rates on auto loans depending on your credit. Bring a hard copy of your preapproval notice to entice the dealer to meet or beat those terms.
- If you’ve been charged illegally, the FTC encourages you to report it.
Source: FTC
The report adds that “our nation’s federal watchdogs… have taken significant steps back from oversight and enforcement of predatory practices in the auto market.”
The National Automobile Dealers Association called the report’s accusations “reckless… specious, unsupported, and refuted by an array of evidence” in a response provided by spokeswoman Amy Wright.
“Cars are increasingly expensive because of advanced technology, stricter safety and efficiency regulations, and supply chain disruptions, to name a few [pieces of evidence],” she furthered.
Yet dealership experience stories like Compton’s becoming more and more prevalent in contemporary America certainly beg to differ.
In May, a dealership owner in Ohio was charged with committing odometer fraud over multiple years on multiple vehicles, reducing the mileage by almost half.
June saw a New York dealership sell one driver his dream car for hundreds of thousands of dollars, only for it to never arrive.
