Consumer Protection and Auto Loan Lenders

If you are thinking about purchasing a new automobile, do you need to be concerned about being treated fairly when it comes to an auto loan? According to a recent article in Auto Credit Express, consumers who take out auto loans need to be just as careful as other borrowers about predatory lending practices. While we often hear about issues of consumer fraud and deception when it comes to mortgages, for example, auto loans can also be risky. It is important to understand your rights when you visit a car dealership and to speak with an experienced Oak Park consumer protection lawyer if you think you may have been treated unfairly by a predatory lender.
To better understand your rights, it is essential to know about federal laws that protect consumers who are taking out auto loans. The article highlights some of the following laws and the ways in which they protect borrowers in the Chicago area.
Understanding How the Equal Credit Opportunity Act Protects You
Under the Equal Credit Opportunity Act (ECOA), lenders are prohibited from engaging in credit discrimination (in other words, discriminating against you and deciding not to give you a loan) on the basis of any of the following:
  • Race;
  • Color;
  • Religion;
  • National origin;
  • Sex;
  • Marital status;
  • Age; and
  • Recipient of public assistance benefits.
While a lender can ask you questions about this information in some cases, they are not allowed to use it when deciding whether to extend credit to you. To be sure, a lender might ask information about your race, sex, or marital status, but if that lender decides to deny you a loan, those factors cannot be taken into account in the denial decision. Instead, to deny you credit, the lender must be considering other factors, including but not limited to:
  • Your income;
  • Your expenses;
  • Your current debts; and
  • Your credit history.
Your Rights Under the Truth in Lending Act
Under the Truth in Lending Act (TILA), borrowers must be provided in writing with the terms of the loan prior to agreement, including:
  • Monthly payment amount;
  • Payment due date;
  • Length of financing term;
  • Finance charges;
  • Late payment charges; and
  • APR.
This information must be provided in writing, and as the U.S. Department of the Treasury explains, TILA “requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans.” This law also gives consumers the right of rescission. In short, the right of rescission “allows you three days to reconsider your decision and back out of the loan process without losing any money.” As the Treasury Department makes clear, “this right helps protect you against high-pressure sales tactics used by unscrupulous lenders.”
Other federal laws are also in place to protect consumers who take out auto loans, including the Fair Credit Reporting Act and the Risk-Based Pricing Rule. If you have questions about your rights or believe your rights may have been violated, an Oak Park consumer protection attorney can discuss your options with you. Contact the Emerson Law Firm today.
See Related Blog Posts:
Debt Collectors Not Protected By Usury Laws

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