Refinancing a title pawn

January 16, 2013 17:02 by Consumer Ed

Dear Consumer Ed: 

I saw a billboard that said I could refinance my title pawn.  Is this just a lower interest title pawn, or is it a way to keep from losing my car if I am late with a payment?

Consumer Ed says: 

It sounds like this company is likely just offering possible lower interest title pawn financing.  When refinancing any type of loan agreement, the amount owed under the old agreement is paid off in exchange for a new loan with new terms.  There are two advantages to refinancing a title pawn, but there is also a potential drawback. The first benefit is that payments due under the new agreement should be lower than your old agreement.  Lower interest rates might now be available to you due to changes in market conditions or the improvement of your credit score.  Second, title pawns, unlike other loans, are usually issued for only 30 days, after which the entire loan becomes due.  Refinancing your title pawn would give you more time to repay your loan. 

The potential disadvantage is the risk of falling into the trap of having to constantly refinance your title pawn.  Before you refinance, ask yourself if you think you’ll be able to pay off your loan one month from now.  If you can’t, you’ll be in the same position you are now, and you’ll either have to refinance again or risk losing your car. 

If you are thinking about refinancing your title pawn, you should make sure that the company through whom you will be refinancing has a good rating with the Better Business Bureau (www.bbb.org).  Remember, as long as you are using your car as collateral for a loan, you run the risk of losing it if you’re late with any payments.

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Up-front processing fees for loan may indicate scam

November 26, 2012 22:37 by Consumer Ed

Dear Consumer Ed: 

I applied for a loan online. I then received a call from business reps from an out-of-state bank telling me that my loan had been approved but that I had to pay a $120 processing fee via Green Dot MoneyPak card. I got the card and gave the number to the business rep, who then asked for $300 for another processing fee. I bought another card and gave them the number.  They then asked me to pay another fee, and I realized I was being scammed.  Is there any way I can get my money back?

Consumer Ed says: 

It is a violation of Georgia’s Fair Business Practices Act for someone engaged in telemarketing to employ a scheme to defraud another person or to commit theft.  If the bank violated the telemarketing laws when they called you about the loan, you may want to consult a lawyer to learn about potential legal claims against the company.  You should also report your situation to the Attorney General’s Office and the Department of Banking & Finance in the State in which the bank is headquartered. They may be able to take action if the bank engaged in illegal activities. 

However, it is important to realize that the representative who called you may not have actually worked for the bank, and that, unfortunately, you may have been the victim of a scam.  In that case, you are very unlikely to recover your lost money since the representative who called you will not be easily traceable.  Regardless of whether or not this was a scam, you should also report your situation to the following government agencies in order to attempt to recover your money and to spread the word about the possibility of a scam:


Another avenue worth exploring is attempting to recover your money from Green Dot MoneyPak.  As the seller of prepaid cards, Green Dot MoneyPak is required to include the terms of use in the packaging that accompanies the cards at the time of purchase, as well as making such terms available upon request.  Green Dot MoneyPak features the following disclosure on its website, moneypak.com:  “Green Dot is not responsible for paying you back. Your MoneyPak is not a bank account. The funds are not insured against loss.”  MoneyPak suggests that its customers treat the money on the MoneyPak like cash—once the MoneyPak is lost, there is no way to trace and recover the money.  If Green Dot did not display the required disclosures clearly and conspicuously, then it may have violated the law.  If the required disclosures accompanied the card at the time you purchased it, then you will likely not be able to recover your money from Green Dot MoneyPak.  You may want to consult an attorney for legal advice. 

While this will not assist you in retrieving your money in this instance, you should take the following steps in the future when attempting to obtain a loan:

  • Don’t pay up front.  Legitimate offers of credit generally do not require an up-front fee. Any fees are taken from the amount borrowed after the loan is approved. 
  • Don’t fall for promises that you’ll get a loan regardless of your credit record.  If you have poor credit or haven’t established a good credit record yet, it’s unlikely that a reputable company will lend you money. 
  • Do business with licensed companies.  Ask Georgia’s Department of Banking and Financing (http://dbf.georgia.gov/general-information) if the lender operating in Georgia has complied with the licensing requirements.  If it has not, then you should not do business with that company.
  • If you can’t get a loan yourself, get a co-signer.  Having a co-signer may allow you to obtain a loan from a reputable lender when you would ordinarily not be able to.  A co-signer, usually a friend or relative, is someone willing to apply with you for a loan.  You and the co-signer would both be equally responsible for the loan payments. 
  • Get all the costs and other details before you decide.  Shop around for the best loan rates and fees.  Research several lenders, and look for consumers’ reviews of the different lenders.
  • Have proof of what you were promised.  Make sure to get the loan agreement in writing or in an electronic form that you can use to document the deal.  You want the deal in writing so you know the precise terms of the agreement and so the lender cannot change the terms after you enter into the loan agreement.

 

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Can car dealer request Social Security number if I'm not financing through them?

October 25, 2012 23:42 by Consumer Ed

Dear Consumer Ed:

I went to a dealership to buy a car, and the business manager was pressuring me to let him check my credit to get better financing terms than my credit union was offering.  I refused because I am happy with my credit union financing.  I got the buyer's order to take to my credit union to get the check to make the purchase, but the dealer told me that once they had the check and before I drove the car off the lot, I would have to give them my Social Security number.  They gave me a blank credit application to put it on.  They said they needed it to verify my identity, and if they did not check they could lose their license.  I told them that if my credit union was giving me a check to purchase the car, that should be assurance enough that I am who I say I am.  I have already given them my Georgia driver’s license.  Is this legal?         

Consumer Ed says: 

Car dealerships must fulfill a number of requirements in order to avoid penalties; however, looking for identity “red flags” after the customer has retained financing from a third-party is not one of them.  What the car dealership must do is file a Notice of Security Interest with the State of Georgia within 20 days of your purchase to inform the State about the financing involved with this sale. This notice requires minimal information about the purchaser of the vehicle, all of which can be found on your driver’s license.  Accessing a credit report in connection with a credit transaction involving the consumer is permitted under the Fair Credit Reporting Act; however, because you had already obtained credit from another source and didn’t apply for credit through the dealership (in fact, specifically expressed your wish not to do so), the dealer wouldn’t have had a legitimate reason to run your credit history.

Based on your description of your interaction with the car dealership’s business manager, this dealership might be in violation of the Georgia Fair Business Practices Act (“FBPA”).  The FBPA prohibits unfair and deceptive acts or practices in the marketplace.  For example, if the business manager says that he needs your social security number for a “required” background check, but it turns out that this background check is a pretext for finding and offering you alternative financing through the dealership, this act might be considered unfair and deceptive.

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