Under the Hood: Loan availability complaints tick up 57% YoY

Getting a loan or lease has been a source of contention for consumers lately, as evidenced by the 56.5% year-over-year spike in complaints filed with the Consumer Financial Protection Bureau (CFPB). From January through June, consumers filed 695 complaints about the process of securing a loan or lease, up from 444 in the first half of 2021. On a percentage basis, the ratio of complaints rose to 16.9% from 11.5%, according to an analysis by Auto Finance News . Within the CFPB’s category of “getting a loan or lease,” complaints related to credit denials and confusing or misleading advertising or marketing have more than doubled so far this year. Consumers lodged 152 complaints related to being denied access to credit, compared with 67 complaints in the first half of 2021. Several of the CFPB complaint narratives cited adverse-action letters based on inaccurate credit report information. Meanwhile, consumers filed 93 advertising-related complaints, up from 41 last year. Examples of complaints within this subcategory noted unauthorized hard-credit pulls, prices exceeding MSRPs and loans closed with higher-than-advertised interest rates. Another area with a jump in complaints — up 47.3% to 324 — related to fraudulent loans. In several cases, consumers alleged that they were the subject of identity theft, and unauthorized car loans were opened in their names. [caption id="attachment_57329965" align="alignnone" width="2560"]<img class="wp-image-57329965 size-full" src="https://www.autofinancenews.net/wp-content/uploads/2022/07/386425558-scaled.jpg" alt="A seal at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., on Saturday, April 16, 2022. The Credit-reporting company TransUnion is an "out-of-control" repeat offender engaging in deceptive marketing practices the CFPB alleged this week after filing a lawsuit. Photographer: Samuel Corum/Bloomberg" width="2560" height="1708" /> Photographer: Samuel Corum/Bloomberg [/caption] Rising debt-collection complaints Aside from logging complaints about securing loans and leases, consumers also griped about the collection of their auto debt. The biggest year-over-year increase centered around lenders’ threats to take legal action or to share information improperly. Specifically, the volume of threat-related complaints shot up 57.0% to 292. Consumers alleged that lenders contacted their employers, talked to third parties about their debt and contacted them instead of their attorneys, among other actions. Additionally, consumers charged lenders with seizing their property, threatening to arrest them if they did not pay, and suing them in a state where they do not live or did not sign for the debt. On the flip side, consumers complained less often this year about attempts to collect debts not owed. The total number of complaints through June totaled 632, down 19.9% from the prior-year period. Even so, that subcategory was the most popular for complaints, followed by complaints about written notification about debt, at 333. Two other popular grievances were problems at the end of the loan or lease term and struggles to make payments, which registered 861 and 571 complaints, respectively. In the former category, consumers cited a host of issues, including an inability to receive the car’s title; problems related to refinancing, paying off the loan or while selling or giving up the vehicle; and excess mileage, damage, wear-and-tear or termination fees. With regard to payment struggles, consumers most often cited denied requests for lower payments, lenders trying to repossess or disable vehicles, and a loan balance remaining after a vehicle is repossessed and sold. Florida tops the list On a state-by-state basis, vehicle sales volume correlated with consumer complaint volume only some of the time. For instance, California is the No. 1 seller of cars in the U.S., yet Florida topped the list of complaints filed, with 607. Texas had the second-most complaints, at 560, and California was third, at 550. Oddly, the state with the fourth-highest volume of complaints was Georgia, which is ranked 10th by vehicle sales, according to data provider Knoema . Georgians filed 511 complaints up 26.5% YoY. Yet, consumers in a handful of other popular car-buying states — including Maryland, Michigan and Ohio — recorded even higher percentage jumps in CFPB complaints. The lender most often cited by consumers in the CFPB complaint database was Santander Consumer USA . Despite topping the list, Santander’s complaint count plunged by one-third YoY, to 461. Ally Financial ’s complaint tally, meanwhile, rose 21.6% YoY to 417. Other lenders with more than 200 complaints were Capital One Financial (285), Credit Acceptance (280) and Hyundai Capital America (243). Overall, the vast majority of complaints — 90% — were closed, and an explanation was provided to the consumer. But this year, a smaller percentage of complaints were closed with monetary relief: 2.1% versus 2.6% in the first half of last year. And the ratio of complaints that were closed with non-monetary relief rose to 6.5% from 5.3%. Auto Finance Summit, the premier industry event for auto lending and leasing, returns October 26-28 at the Wynn Las Vegas. To learn more about the 2022 event and register, visit www.AutoFinanceSummit.com .

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