If you’ve ever been in a position where you didn’t have money to pay your car payment, you may have been approached or seen an advertisement for a vehicle loan modification program. Similar to mortgage loan modification, this type of loan promises to reduce monthly repayment from 25-40% of the monthly payment. The problem is many so called modification companies take your money and do nothing at all.
Since the BBB, FTC, and other regulatory agencies have cracked down on mortgage modification loans, creative financial fraudsters have began conning those behind on car payments into their scheme. This is one of the top financial scams consumers must watch out for in 2013.
Here’s how the scam works:
You’ll see an advertisement either online, through direct mail, or in some cases, you’ll be approached by what may seem an innocent person willing to help you catch up on your car payment. It’s likely that your judgement will become cloudy–because you’re worried about paying the car payment–and you could end up applying for the loan. The unlawful lender will state that you can reduce monthly payments by as much as 40-50%, or sometimes even higher. The higher the percentage, the more likely you are to fall for the scheme.
You’ll then be asked to send in an administrative type fee to cover “administrative” fees and other nonsense. In some cases, users have reported that they have sent in such fees that totaled over $1,000. Once you send in payment, you’ll likely never hear from the lender again. Once they have your money, you’ll never get the chance to reach out or get a refund.
Here’s how to avoid it.
Never send a lender money before they issue you a loan. In fact, never send a lender a payment unless you are repaying the loan back. Any lender that promises to provide you with a loan, even if it’s a payday loan, if you first send them a “fee” is a scam. Before you shell out money to a company like that, be sure you read our articles on debt advice to help you reduce costs and pay your bills off faster. Instead of paying such fees, you can work toward paying the bills off that are holding you back.