Times are tough and many people are finding themselves drowning in debt or still suffering the consequences of prior delinquent debts. Poor credit, history of repossession and stingy lenders can all make getting a secured loan more difficult. Even worse is a new wave of auto loan scams that are trapping people into agreements they can’t fulfill.
The Wrong Path
Subprime auto loans target people with poor credit or complicated loan histories. The reason these loan are obtainable for someone who would be denied a typical car loan is that they carry high interest rates, which may even be hidden in the contract terms. What typically ends up happening is that a consumer takes out the loan with a monthly payment they can afford; the rate often inflates significantly after the passing of time or with the natural rise of the prime interest rate. With the rise in interest rates comes a rise in monthly payment requirement, often leading the consumer to default.
The problem is twofold: (1) most consumers in this financial state already face challenges with money management or are more likely to experience financial hardship during the life of the loan, and (2) the lenders often prey on people they deem as high risk, hoping for default. Once default happens, the lender repossesses the car and sues the consumer for the loan balance. Not only does the lender retain possession of the car, often reselling it for profit, but they also sue for payments from the consumer.
Unfortunately, this type of predatory lending has been commonplace in recent years. As the economy is working to recover, many people will face consequences from prior financial indiscretions for the next several years. However, there are ways to get out of a bad loan and manage debts. A St. Petersburg bankruptcy lawyer can help you fight your debt problems and regain control over your financial future.