Credit and Sublease Brokers

Credit and Sublease Brokers

A new and rapidly growing area of consumer fraud involves con
artists who prey on people who have bad credit and who are having
problems getting loans to buy cars. There are two main schemes:
o The "credit broker" promises to get a loan for you in exchange
for a high fee. In many cases, the "broker" takes the fee and
disappears, or simply refers you to high-interest loan companies.

o The "sublease" broker charges a fee to arrange for you to
"sublease" or "take over" someone else's car lease or loan. Such
deals usually violate the original loan or lease agreement. Your
car can be repossessed even if you've made all of your payments.
You also might have trouble insuring your car.

To protect yourself:

o check with your state or local consumer protection agency to
find out if the broker is required to be licensed;

o do not do business with a company that does not appear to be
complying with state law; and

o do not pay for services in advance.

To order a free publication on how to buy a new or used car,
contact the Federal Trade Commission, Public Reference Section, 6th
and Pennsylvania Avenue, N.W., Room 130, Washington, DC 20580,
(202) 326-2222.

Car Leasing

o Shop around for the best leasing deal. Read lease promotions
carefully. The attractive low monthly payment might be available
only if you make a large down payment (capitalized cost
reduction) or a balloon payment at the end of the lease.

o Beware of open-end leases. They require the consumer to pay the
difference if the vehicle is worth less at the end of the lease
than was estimated originally.

o The Consumer Leasing Act requires leasing companies to give you
important information in writing before you sign a contract. Read
the documents given to you by the leasing company and make sure you
understand them before you sign anything. In
particular, look for:

-up-front costs, for example, security deposits, down payments,
advanced payments and taxes;

-the terms of the payment plan;

-termination costs, for example, excess mileage penalties,
excessive wear and tear charges, and disposition charges; and -
penalties for early termination or default.

When you have paid off a car loan, you own the car. When you have
paid off the lease, you own nothing.

To order a free publication on car leasing, contact the Federal
Trade Commission, Public Reference Section, 6th and Pennsylvania
Avenue, N.W., Room 130, Washington, DC 20580, (202) 326-2222.
Lemon Laws

Almost every state has a new car "lemon law" that allows the owner
a refund or replacement when a new vehicle has a
substantial problem that is not fixed within a reasonable number of
attempts. Many specify a refund or replacement when a
substantial problem is not fixed in four repair attempts or the car
has been out of service for 30 days within the first 12,000
miles/12 months. If you believe that your car is a lemon: o
contact your state or local consumer protection office for
information on the laws in your state and the steps you must take
to resolve the situation;

o give the dealer a list of symptoms every time you bring it in
for repairs; keep copies for your records;

o get copies of the repair orders showing the reported problems,
the repairs performed and the dates that the car was in the shop;
and

o contact the manufacturer, as well as the dealer, to report the
problem. Some state laws require that you do so to give the
manufacturer a chance to fix the problem. Your owner's manual will
list an address for the manufacturer.

If the problem isn't resolved, you might have the option of
participating in an arbitration program offered by the
manufacturer or your state. Contact your state or local consumer
protection office for information.

Lemon Law Summary is available upon request by sending a self-
addressed, stamped (52 cents) envelope to the Center for Auto
Safety, 2001 S Street, N.W., Suite 410, Washington, DC 20009.
Vehicle Repossessions

When you borrow money to buy a car, you should know that:

o The lender can repossess if you miss a payment or for any
default (a violation of the contract).

o The lender can repossess without advance notice.

o After repossession, the lender might be able to accelerate,
meaning the lender can require the borrower to pay off the entire
balance of the loan in order for the borrower to get the vehicle
back.

o The lender can sell the vehicle at auction.

o The lender might be able to sue the borrower for the
deficiency if it sells the car for less than the borrower owes.
This is true even in voluntary repossessions.

o The lender cannot commit a "breach of the peace," for example,
breaking into a home or physically threatening someone, in the
course of a repossession.

If you know you're going to be late with a payment, talk to the
lender to try to work things out. If the lender agrees to a delay
or to modify the contract, be sure you get the agreement in
writing.

Some states have laws which give consumers additional rights.
Contact your state or local consumer protection office for more
information.

To order a free publication on vehicle repossessions, contact the
Federal Trade Commission, Public Reference Section, 6th and
Pennsylvania Avenue, N.W., Room 130, Washington, DC 20580, (202)
326-2222.