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Are you having trouble paying your car loan and thinking about doing business with a company that promises to get you a loan with lower monthly payments? Not all refinancing companies play by the rules. Scammers will take your money and do nothing in return. Learn how to recognize, avoid, and report auto loan refinancing scams.

How the Scam Works

Here’s how auto refinancing scams work:

  • Scam refinancers promise they’ll get you lower payments on your auto loan, but insist that you pay them first. They may call the advance payment an “enrollment fee” or something similar. The fee will likely be several hundred dollars.
  • Scam refinancers often tell you to stop making car payments while they negotiate a deal with your lender. Often, they tell you to make your loan payments directly to them and say they’ll pay your lender for you. In time, they might also tell you they need more money from you to supposedly keep working on your case.

In reality, scam refinancers aren’t negotiating with your lender or anyone else. If you make your monthly car payments to the refinancer instead of your lender, those payments will likely go straight into the scammer’s pockets — not to repay your loan. You may only find out about the fraud when your lender contacts you about missed payments, or your car is repossessed.

What Scammers Tell You

Auto refinancing scammers will say just about anything to get your money:

  • Scammers might claim they have special relationships with lenders. They don’t.
  • Scammers might tell you exactly how much lower your monthly payments will be if you do business with them. They’re lying.
  • Scammers might display testimonials from “satisfied” customers. They’re not real customers.
  • Scammers might promise you a “money-back guarantee” if they can’t make a deal with your lender. If you pay them, your money will be gone.

No one can guarantee they’ll lower your payments. If you hear claims like these, move on. They’re the telltale claims of auto refinancing scammers.

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. Tell your lender about your current situation and ask about your options, including possibly

Auto loan modification: Auto loan modification usually involves pushing missed payments to the end of the loan or extending the loan term — say, from 60 months to 72 months. A modification can give you some breathing room now but can increase the amount you pay in interest and other charges over the life of the loan, even with a lower interest rate. Lenders rarely lower the total amount you owe for the vehicle in a loan modification.

Returning the vehicle: In some cases, your lender may offer to take the vehicle back and forgive the loan. Be sure to get a written statement from the lender saying that returning the vehicle fully satisfies your loan. If not, the lender might still claim in court that you owe money on the loan or owe a “deficiency balance,” which is the difference between what your car sells for and how much you still owe on it.

Don’t try to avoid the problem by doing nothing. Even if you have to miss a payment, don’t be afraid to talk with your lender to learn about your options. The longer you wait, the fewer options you’ll have. And, if you miss payments, you could be charged a lot more in fees and hurt your credit. Your lender could also repossess your car — sometimes without warning.

What To Know About Repossessions

States have their own rules about how cars can be repossessed and what happens after. If lenders break the rules, they might lose other rights against you or have to pay you damages. Check with your state attorney general or consumer protection agency to learn what rights you have in your state. You might have options to buy back the car or get any personal property left inside it.

You also might still owe money after the car is repossessed. You could be on the hook for any difference between what your lender gets for selling the car and what you still owe on it, plus any fees related to the repossession. In most states, your lender can sue you for the difference, or “deficiency.” An attorney can tell you if you have grounds to dispute a deficiency judgment.

Avoiding Auto Loan Refinancing Scams

Before signing up with an auto loan refinancing company, take these steps to help avoid scammers:

  • Search online. Look up the name of the refinancing company plus the words “scam,” “review,” or “complaint.” See if others say they’ve been scammed by that company. Check with your state attorney general’s office, too. No complaints? It doesn’t guarantee that a company is honest. But complaints can tip you off to possible problems.
  • Take your time. Don’t let yourself be rushed into signing an agreement. Be sure you understand the terms before you sign.
  • Talk with someone you trust. Tell them about the company and what it says it will do. What do they think?
  • Stay away from companies that promise to lower your payments. No one can guarantee they’ll lower your payments. That’s always a scam.

Report a Problem

If you have a bad experience refinancing an auto loan, report it to the FTC at and to your state attorney general or consumer protection agency.

For More Information

Read Vehicle Repossession to learn more about what can happen, and what your options are, if your vehicle is repossessed. And check out How to Get Out of Debt for information about getting out of debt and how to find legitimate help.