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If you're having trouble paying your car loan, you might think about doing business with a company that says they can get you lower monthly payments. But not all refinancing companies play by the rules. Scammers will just take your money and do nothing in return. Learn how to recognize, avoid, and report these scams.

What the Scammers Tell You

Scam companies that promise to lower your car payments often:

  • say they have relationships with lenders when they don’t
  • feature fake testimonials from “satisfied” customers on their websites
  • falsely claim to have a money-back guarantee if they can’t make a deal with your lender
  • make specific, but false, claims about how much they will reduce your monthly payment

How the Scam Works

After promising you that their services will lower your payments, the company will make you pay several hundred dollars up front, in what they sometimes refer to as an “enrollment fee.” The company might tell you to stop making car payments while it negotiates a deal with your lender. In some cases, the company then tells you it needs more money to keep working on your case. The company might even tell you to make your payments directly to it so the company can pay your lender on your behalf.

In reality, the company isn’t negotiating with anyone, and if you are start making your monthly payments to the company those payments are likely going straight to the scammers’ pockets (and not to your loan). You may only realize that when your lender contacts you about missed payments or your car is repossessed.

What To Do if You Can’t Afford Your Payments

If you’re having trouble making car payments, contact your lender as soon as possible to talk about your options. The longer you wait, the fewer options you’ll have.

Auto loan modifications usually involve pushing missed payments to the end of the loan or extending the loan term — say, from 60 months to 72 months. A modification can get you some breathing room now but it will increase the total amount you pay in interest over the life of the loan, even with a lower interest rate. Lenders rarely cut the total amount of principal or interest rate you have to pay as part of an auto loan modification.

What To Know About Repossessions

If you don’t make your car payments on time, your lender might have the right to repossess your car without going to court or telling you in advance. Your lender also might be able to sell your loan to a third party — called an assignee — who may have the same right as the original lender to take your car.

Report a Problem

If you think you’ve been ripped off, report it to the FTC at and to your state attorney general.

For More Information

Visit Dealing with Debt for tips on money management and how to recognize debt-related scams and frauds.