A new crop of ugly predators are stalking the hordes of desperate debtors looking for relief - auto loan modification companies. Taking their cues from the discredited foreclosure rescue firms who are being shut down by the dozens, auto loan modification companies are claiming that they can help vehicle owners avoid car repossession by negotiating an auto loan modification with their lender. The Better Business Bureau is reporting an increase in the proliferation of these types of companies now that more that 1.9 million cars were repossess in 2009 alone.
"Auto loan modification companies are following in the footsteps of unscrupulous mortgage modification companies which have long targeted struggling families who are just trying to stay above water," said Alison Southwick, BBB spokesperson. "Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater."
You can only imagine the financial pain that many debtors experience after dishing out hundreds of dollars to unscrupulous auto loan modification companies only to find that the companies cannot or simply don't try to negotiate a modification of their auto loan.
Let's look at the reality of vehicle repossession:
- If you fail to pay your car note, your vehicle is at risk for repossession. There is nothing you can do short of paying the delinquent amount or filing bankruptcy to stop a repossession already in process.
- Many lenders are willing to work with a borrower who has become delinquent on their car note if they act early. But it is not necessary or even productive to pay an auto loan modification company to convince a lender to work out some type of settlement. Auto lenders are often more than willing to directly work with the borrower to avoid repossession, once again, if they act early.
- Most of these so-called auto loan modification companies have no intention of helping you save your car from repossession. Just like so-called foreclosure rescue companies they are only interested in squeezing your last dollar out of you.