Now is not a good time to buy a new or used car, but sometimes it is unavoidable. Some people may choose to have an auto repair done instead of buying a new vehicle. With that in mind, Consumer Reports wants people to be aware of predatory auto repair loans that could cause you to overpay.
Consumer Reports wants you to avoid predatory auto repair loans
Consumer Reports didn’t beat around the bush when it named names in a recent report. The stores listed are Jiffy Lube, AAMCO, Meineke, Big O Tires, Grease Monkey, Midas and Precision Tune Auto Care. The brands mentioned above are represented in most cities in the USA. Consumer organizations, including Consumer Reports, have found that some of these stores are charging customers up to 189% interest for basic car repairs.
Some states have borders to protect people from these predatory practices, but there are ways to circumvent them. By working with a bank, a legal gray area allows garages to offer credit through a bank in Utah, where those limits do not exist. The “Rent-a-Bank” process uses the EasyPay Finance and Transportation Alliance Bank (TAB) to circumvent the rules.
According to a 2017 AAA survey, most drivers can’t afford an average auto repair bill of $500 to $600. These predatory auto repair loans target those who cannot pay such a bill. Higher rates make it even harder to catch up on payments. A simple car repair can add up to a mountain of debt.
Consumers have accused EasyPay Finance of offering predatory auto repair loans
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When auto repair shops partner with EasyPay Finance, there is an additional way to attract people. If the customer can pay the loan within 90 days, it is interest-free.
“Lending at 189 percent is illegal in most states, but TAB Bank helps EasyPay Finance circumvent those laws and multiply the pain of an expensive car repair.”
Lauren Saunders | Associate Director at the National Consumer Law Center
However, many customers have filed complaints against EasyPay Finance and its California parent company. These complaints claim that the company makes it impossible even when customers try to pay off the debt early. Unexpected charges and additional interest will be appended to increase the amount owed. One complaint noted that the company had paid the loan application fee using the debit card on multiple occasions.
A spokesman for Jiffy Lube International said the company has no business relationship with EasyPay Finance. She also pointed out that third parties own and operate Jiffy Lube service centers. Similar statements were repeated by Midas and Big O. Consumer Reports has not heard from some of the other companies listed.
Be sure to read all agreements before signing and get a copy of all documentation
EasyPay Finance has been in the news before for something similar. In one situation, the company offered loans for purebred puppies. Customers found the loans were repaid but were tracked down by the company for an outstanding balance. “Based on the many complaints that have been filed by consumers, it is clear that many borrowers are shocked by the sky-high interest rates associated with these loans and the difficulty in successfully completing repayment,” said Chuck Bell of Consumer Reports.
To avoid getting caught up in this type of predatory auto repair loan, Consumer Reports has some tips. Check the loan before signing it and look closely at the interest details. The details of the offer should be checked, even if the company makes it difficult. If you can use a credit card or get a personal loan, this could be another solution. A credit card can offer protection, and a personal loan can have a cheaper interest rate.
It is good to avoid borrowing above 36%, which is the top rate for affordable borrowing. A company that exceeds this rate may not be willing to work with clients across the board. Also, get a copy of any signed agreements.
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