Trying to get a decent loan during hard times is tough. Trying to keep your payments current to existing lenders is also tough, imagine not having a job, and wanting to do all that. This is not an education piece, but a “let’s not go down that road again” piece. Predatory lenders thrive during the backside of a peak. When we refer to a peak we are talking about the point when our economy is just about to turn down. We have chosen to pick on AmeriCredit for this article, since they pick on people who are most financially vulnerable.
A good example of AmeriCredit’s bad practice is to look back at their history in comparison to the U.S. economy. For us, we will look at 2002 when the economy took a slight drop. If you look at the graph you will see AmeriCredit’s value climbed just before the peak, and as the economy started down so did AmeriCredit’s value. Just not at the same pace. Just before the peak, consumers were all ready feeling the pinch, and hence they (consumers) get loans from companies that have no scruples. Another item to point out in this graph is, every sharp downturn after the peak in the economy gives AmeriCredit a little boost in their stock value.
americredit
Now we have visited AmeriCredit’s web site looking for some basic facts. We wanted to know what the “average” interest rate is on a standard simple loan. We wanted to also see some kind of generic Terms of Service agreement posted. We visited the “help and Faq” link only to find very stringent answers to valid questions. You cannot in anyway get behind or have an emergency and expect AmeriCredit will be sympathetic to you or your needs. So if your used Camry breaks down, and you need to get it fixed to go to work. Do not take money away from your payment as this will add a huge headache to your all ready over inflated loan. Not to mention the barrage of harassing phone calls you will receive multiple times a day from AmeriCredit’s collections department. Some people have even compared AmeriCredit as extortionists.
Risk-based pricing has its place however, there has to be a balance to our lending practices. Our society does in fact need sub-prime lenders for people with less than perfect credit. But, our defunct regulations allow these types of Bandits to run amuck and prey on people who just need to get back on their feet. There needs to be reform. A great example of government imposition would be to set low “late payment penalties” that cannot be tied into the principal of the loan. Another great mandate, force companies like AmeriCredit to offer deferments, at least once a year to clients with good payment history. There needs to be some accountability on their part, so that the consumers don’t bear all the weight.
If all this sound right, and your still left with the question “This does not help me, what can I do?” Well normally this is where we say negotiate with them to lower your loan. And as you have learned, AmeriCredit won’t negotiate. You are left with even fewer options, your credit score is almost certainly been damaged by these types of companies, so refinancing through another lender is out the window. You can’t afford to fix your car, because you need to make the payment. Our philosophy is, give them their junk back, and start finding alternative transportation. Sure not everyone has this option, but if you break it down financially, trying to keep this auto loan alive is not worth your emotional and physical health.
If you decide to keep your loan with them, and you fall behind than arm yourself with knowledge. Every time they call you, let them know that you are recording the conversation. Keep a pen next to the phone, and note the date and time when they call you. There is no need to get their name, since you will be recording this. Eventually they will screw up, and you can than proceed with litigious actions that might just get you that car for free. Also file complaints regularly with your State Attorney General’s office and, the FTC.
Eventually companies like this will meet their demise. What we need to do is learn from our past and not turn towards these loan sharks in the future.
Reading material:
http://www.ftc.gov/bcp/bcpfp.shtm
http://finance.yahoo.com/q?s=acf
http://www.complaints.com/tagged/americredit.htm
One Comment, Comment or Ping
pokemon
I was able to refi before the economoy crapped out. i will say while I had my loan with them, they were terrible to deal with.
Apr 26th, 2009
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