Auto Loan Refinancing Scams
We’re seeing a lot of scam companies out there offering auto loan refinancing, not modification but refinancing. The Federal Trade Commission (FTC) has a really good article about these kinds of scams and how to recognize them. Are you having trouble paying your car loan and thinking about doing business with a company that promises to get you a loan with lower monthly payments? That’s the key—you can’t get a lower monthly payment on a car loan. You can do a short sale or a loan modification for a different amount, but you’re not going to get lower payments.

How the Scam Works
The scammers promise they’ll get you lower payments but here’s the catch: they tell you to stop making car payments while they negotiate. Then, they instruct you to make your loan payments directly to them, saying they’ll pay the lender for you. It’s a total scam. Don’t pay your car payments to anybody except for your lender. You shouldn’t stop paying your car payments at all.

False Claims of Special Relationships
Scammers will tell you they have a special relationship with the lenders. No auto refinance or loan modification company has a relationship with the lender. They’re just doing something on your behalf that you could do yourself. Everything a loan modification company could do, you could do yourself if you wanted to. Your lender may offer to take your vehicle back and forgive the difference in the loan. That’s what you want to aim for—forgiveness of the loan, not just lower payments.

Avoiding Repossession
Repossessions can lead to owing money even after the car is taken. You could be on the hook for the difference between what the lender gets for selling the car and what you still owe on it (deficiency judgment). Avoid repossession; you want control over the sale process. You could sell the car yourself to mitigate losses.