Lemon laws protect you after the purchase in case of mechanical defects and non-conformities. But what laws protect you before and after you drive off the lot, with regard to financing, paying and credit reporting? You are protected by a series of must know consumer rights, including the Truth in Lending Act (TILA), Fair Credit Reporting Act (FCRA), Electronic Fund Transfer Act (EFTA), Equal Credit Opportunity Act (ECOA). These laws are like the lemon law in that violations entitle you to damages and no cost attorney representation.
Truth In Lending Rights
The federal Truth in Lending Act (TILA) regulates creditors and auto loan lenders and provides protection to consumers to prevent any non disclosure or inaccurate disclosure crucial information during the finance negotiations and lending process. Creditors such as banks, credit unions and finance companies are required to comply with TILA and provide you a “final disclosure statement” at the time of loan closing. This Truth In Lending disclosure is required to be in a specific format, and typically must include the creditor’s name and address; the amount you are financing with an itemization and disclosure of the total sales price and down payment/required deposit information; the finance charge and the annual percentage rate (APR), along with any variable rate information; the payment schedule and the total number of payments; a demand feature along with both a prepayment policy and a late payment policy; whether there are any security interests in the loan and whether there are any security interest charges; any insurance requirements (for example, GAP auto or GAP life); a contract reference; and an assumption policy.
A lender’s failure to comply with T.I.L.A. permits an aggrieved consumer to bring a claim in any U.S. district court or in any other competent court within one year from the date on which the violation occurred, and except as otherwise provided by state law, allows a longer period where T.I.L.A. violations are asserted as a defense, set-off, or counterclaim. Violations of TILA permit a consumer to recover actual damages, statutory damages in the amount of double the correctly calculated finance charge, but in any event not less than $200 or more than $2,000, plus payment of your attorney fees (so hiring a lawyer to protect your TILA rights should cost you nothing out of pocket. Contact an experienced consumer protection attorney if you suspect that all important information concerning the specific terms of your loan agreement was not disclosed or was incorrectly disclosed during the lending and purchasing process.
Fair Credit Reporting Rights
Special deals that offer incentives such as 0% APR (annual percentage rate) or no money down can often be found, most offered by automobile manufacturers and their financing arms. In the majority of auto financing deals your credit rating, determined by your credit history, has a large impact on how attractive the loan offer you receive may be. Even the amount of an acceptable down payment will be determined by the status of your credit.
If a dealership, bank or finance company pulls your credit report, the report should be a true representation of your credit history as this will almost guarantee that you receive the most attractive loan rate possible. If during the loan process you discover your credit report has errors, you may not wind up with the best offer or the lending institution may request more of a down payment. This could be a violation of the Fair Credit Reporting Act (FCRA), a law that was enacted to make certain your payment history, including your vehicle payment history is accurate and up to date.
Violations of the FCRA may entitle you to actual damages (for example, the difference between the loan rate you should have received in your credit report was accurate versus the loan rate you did receive, plus statutory damages, plus payment of your attorney fees for bringing an action under the FCRA.
It is imperative you check your credit report prior to applying for a loan as you must dispute any inaccuracies to the furnisher or reporting agency and provide them an opportunity to cure the inaccuracy before bringing a claim under the FCRA. The Federal Trade Commission sponsors a website where you can pull a report from each of the major bureaus for free once a year so pulling the report is free. You can receive free help disputing inaccuracies by calling 888-565-3666, and if you have already disputed to no avail, you can get free* legal help.
Equal Credit Opportunity for All
All consumers applying for a loan to finance their vehicle, regardless of race, religion, national origin, marital status, or gender are protected from credit discrimination. The law that regulates the granting of credit to ensure fairness and equality is the Equal Credit Opportunity Act (ECOA). Banks, finance companies and others who extend credit for vehicle purchases must comply with this law. If you purchased a vehicle and think that discrimination was a factor during your vehicle transaction, your rights under the Equal Credit Opportunity Act may have been violated. For example:
- When a consumer has attempted to secure a loan or credit and is denied, notice must be provided to the applicant along with the reason for denial.
- A credit provider cannot ask race, national origin, color or religion, age or marital status during the application process.
An experienced consumer protection attorney can assist in ensuring that you were treated fairly and in compliance with this law. If you think a violation has occurred, the creditor or lender could be liable for damages up to $10,000 and your attorney fees and court costs may be paid for by the defendant under the “fee-shifting” provision of this law.
Making Your Car Payment Electronically
After your credit approval and purchase of your vehicle you may decide to use one of the convenient methods now available to make a monthly car payment via electronic fund transfer such as auto pay, or online bill pay. Before you set up this type of payment, the creditor or lending institution must give you information regarding your rights and it must be given in a form that you can keep. Regulated by the Electronic Fund Transfer Act (EFTA) this information includes the type of electronic transfers you can make, fees and limits on transfers, your rights concerning documentation of transfers and procedures to stop payments, third party disclosure rights, error reporting procedures and transaction liabilities by the lender.
Sometimes an electronically based payment can go awry, either due to technical or other issues. Though you have been provided with documents and information it may be tough to sift through and find out exactly what went wrong and if a violation has occurred. Contact our consumer protection lawyers by calling 888-565-3666 for a free consultation; we can assist in advising as to your rights concerning electronic fund transfers and your vehicle payments.
Avoiding Being a Victim of Auto Fraud
Last but not least, buying a new or used car can be a pitfall for being a victim of consumer fraud. Unscrupulous sellers are everywhere, whether you are buying a new car or a car that has been previously owned. Be on the lookout for things like the car’s prior history (for example, was it ever in an accident; has it suffered hail damage, or damage during transport or a prior accident, and/or was it previously repurchased by its manufacturer because it was a “lemon.”
Also, be careful for what is called “spot delivery”, or where you have not yet been finally approved for financing but the dealer takes your trade and gives you the new car “on the spot.” Often times, this is just a “yo-yo” sale where the dealer calls you back, tells you that your loan was denied and makes you sign for a new higher loan or give a bigger down payment, and when you try to back out, the dealer tells you that your trade in was already sold.
Every state has a form of an unfair or deceptive trade practices act or prohibits fraud through common law, and being a victim of fraud may entitle you to actual damages, punitive damages and attorney fees. Contact Attorneys For Consumers licensed in your state by calling 888-565-3666 for a free consultation.