CFPB highlights vehicle lending woes

The Consumer Finance Protection Bureau (CFPB) has highlighted issues in the auto lending sector in its latest monthly ‘spotlight’ statistics on complaints it has received.

The report shows that consumers continue to complain about issues managing their loans and problems they encounter when they are unable to pay off the loans. As of June 1, 2016, the bureau has handled approximately 906,400 complaints across all products.

The “consumer loan” category in the CFPB’s consumer complaint database includes complaints about vehicle loans and leases, installment loans, pawn loans, title loans, and personal lines of credit. Since the CFPB began accepting consumer complaints in July 2011, the bureau has handled approximately 38,500 complaints in this category.

Its latest analysis suggests that the majority of these consumer loan complaints are about vehicle loans. Of the 38,500 complaints in this category submitted to the bureau, 52% were about vehicle loans. The second most common type of consumer loan complaints were about installment loans, which accounted or 31% of the total.

Nearly half of complaints (43%) about consumer loans submitted to the CFPB have to do with consumers struggling to manage their loan, lease, or line of credit, the survey showed. Consumers complained about payment processing issues on their loan, such as not having payments applied to their accounts in a timely or proper manner.

Some consumers also complained of not receiving clear explanations of how fees and high interest rates would affect the total cost of their loans. Additionally, consumers complained they did not understand why their account balances did not decrease after making a large number of monthly payments.

In addition, consumers taking out loans sometimes complained of their vehicles being repossessed without any notification. In some of these cases, the repossession occurred while the consumer believed that a resolution agreement was in place. Other consumers complained of having to voluntarily give up their vehicle because they could no longer afford their payments. In many of these instances the consumer ended up owing more than the value of the vehicle.

The CFPB has recently released a new auto loan shopping sheet as part of the Know Before You Owe initiative. The shopping sheet offers a step-by-step guide to compare the costs of competing loan offers, and additional online resources aimed at helping consumers shop for an auto loan.

“Consumers deserve to be treated fairly in the financial marketplace,” said CFPB director Richard Cordray. “It is important that financial institutions give consumers accurate information about the terms of their loan and provide proper guidance to help consumers manage the loan and ultimately pay it off.”