Is there any protection for consumers from excessive charges for a car loan?
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Is there any protection for consumers from excessive charges for a car loan?
Last year I went a dealer for the purpose of buying an affordable car that was advertised for 7,500. At that time, my credit wasn’t the best and there were also some mistakes on my credit report that I was unaware of. I was charged 25% interest with gave a finance charge of $6,679 and the total financed $9648 which unfortunately made a $7500 transaction cost $16,328. Despite paying each month and after putting $1500 down, my balance hasn’t lessened. This vehicle is 5 yers old and it’s only valued at $3,100. I owe way more than it’s worth because they’ve used my payments for only the interest. Is a trade/return possible? I attmpted to return it the next day.
Asked on September 7, 2012 under General Practice, Ohio
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Under the laws of all states in this country there are certain laws called "usury" laws which pertain to the maximum amount a lender can charge a borrower on a loan not secured by real property. The 25% per annum interest is excessive most likely where the maximum amount should be 6% to 8 %.
I suggest that you consult with a consumer law attorney about your matter. If the interest rate is held to be usurious by the court, the result is that you have an interest free loan and all interest paid goes to pay down the principle owed. Possibly the lender may have violated state unfair business practices laws as well.
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