Crescent Bank & Trust has been sued for allegedly imposing unauthorized interest, fees, and penalties on its auto loan customers. Essentially, the lawsuit contends that the fees assessed exceeded the terms authorized by the loan agreements.
The case, dubbed Joseph vs. Crescent Bank & Trust, is pending in the Superior Court of Fulton County, Ga. The plaintiff’s attorney is Matthew C. Klase, a partner at Webb, Klase & Lemond LLC.
Is the litigation spigot opening? Should we expect a slew of similar cases as we head into 2010?
All good comments, but don’t forget: three years ago when leasing was subvented by the manufacturers, you could have a $400 monthly payment on a vehicle with a Cap Cost of $45,000. When that lessee goes into a dealership to lease the new version of the same car, the residual drop and lack of subvention causes the new monthly payment to be $700. So the leasing industry is taking a double whammy: lessors tired of losing big bucks and lessees incredulous over current monthly payments, and unwilling to pay them. A real driver (no pun intended) of the 72 and 84 month loan deal.
My 2010 prediction is that entire practice of lender/discount fees used by many sub-prime lenders will be scrutinized heavily from a regulatory standpoint and in litigation. The fees charged to “dealers” for those loans are not included in the Truth-in-Lending box and results in a true cost of the loan much higher than what the disclosed interest shows.
Lenders need these fees to lend to deep sub-prime customers and normally do not have the ability to charge higher interest rates due to state usery laws. So in one regards it is somewhat deceptive to the consumer but yet at the same time, if the lender could not charge those fees the loan would not be approved and the customer who needs basic transportation would not be able to purcahse the car.
Makes sense, Tom. Any trends as far as how creditors fare in those times of increased litigation?
Is this, in fact, a post-collection counterclaim?
Here’s a copy of the lawsuit:
crescentbanklawsuit.pdf