Auto financing refers to the process of obtaining a monetary loan for the purpose of purchasing a car or other type of vehicle. This process is often managed through a car dealership, although there are separate companies that specifically provide car loans apart from a dealership. 

Auto financing is often a necessity because some people cannot afford to purchase a new or used car upfront, or they cannot afford the initial down and monthly payments. The process of obtaining a car loan involves many steps, including:

  • “Shopping” for a lender (the party that will lend the money);
  • Researching the borrower’s credit background and eligibility;
  • Discussing/negotiating loan terms, including interests rates and monthly payments;
  • Approval of loan amounts and details of repayment; and
  • Dispersal of funds.

Once these are in place, the person may then be free to make an automobile purchase. If the borrower does not qualify for auto financing through the dealership or with a lender, they may need to repeat some of the steps above. For instance, they may need to shop around for another lender who will approve them.

What are Some Common Auto Financing Legal Disputes and Issues?

In some cases, auto financing transactions can be a source of legal disputes or conflicts. This can happen because, although auto finance deals are not as major as home or business finance transactions, they can still be sizable in amount. 

Also, obtaining a car loan is important to many people, as the ability to own and drive a car can affect many aspects of life, including work, family visits, recreation, and other uses. Thus, borrowers and lenders may often be more quick to identify points of dispute in the lending process. 

Some common legal disputes and issues that often form the basis of an auto financing lawsuit may include:

  • Loan fraud;
  • Other related issues such as auto warranties (especially if the financing is connected with the dealership);
  • Borrower defaults on loan payments;
  • Issues with debt and loan approval;
  • Unfair lending practices; and
  • Various other related issues.

One of the most common  issues involved in auto financing lawsuits is a dispute over the loan terms. This can include disputes over loan amounts, payment time periods, interest rates, and procedures for cases where a borrower fails to pay back the required loan amounts. 

What is Auto Financing Fraud and What are the Penalties?

Auto loans can sometimes be the subject of fraud or scams. These can take many forms and can involve different types of scams or schemes. For instance, an auto loan scammer might pose as a finance agent and use fake forms or fake information to obtain the person’s personal information. Once they have this information, they might use it further to accomplish identity fraud or other damaging actions. 

As with any type of loan fraud, legal penalties can be severe and can often involve criminal charges. For example, criminal fines and fees may be required, as well as possible jail time. If the person or party committing the fraud is actually a legitimate, licensed loan agent, they may also face other consequences, such as a loss of their loan license. 

In some cases, an auto loan fraud scheme might be widespread and may affect many borrowers and consumers. This can happen for instance if an automobile loan company has fraudulent practices built into their policies. In such cases, the entire business may be penalized, and class action lawsuits may be filed to consolidate the claims more efficiently.  

What is Needed to File an Auto Financing Lawsuit?

Auto financing lawsuits generally require support through documentation and evidence. Fortunately, since auto financing is a highly transactional field, there will usually be a good amount of documentation of the process. 

Some forms of evidence that can be used to support an auto financing claim may include loan contracts, company or agent certification documents, receipts, and pay receipts (for monthly loan payments). 

These can all be used to help settle disputes over the finance contract, especially those having to do with specific contract terms. Auto financing lawsuits typically end with a monetary damages award being issued to the non-violating party, in order to compensate the plaintiff party for financial losses.

For instance, the borrow might be able to recover damages and other costs if they discover that they have been paying too high of a monthly amount according to the contract. Other consequences can be applied as well, such as a requirement that the lending company revise their company policies regarding contract terms. 

Do I Need a Lawyer if I’ll be Filing an Auto Financing Lawsuit?

Auto financing deals can often involve several thousands of dollars that must be paid off regularly over relatively long periods of time. You may need to hire a lawyer in your area if you have any legal issues or disputes over an auto financing arrangement. 

Your attorney can provide legal advice and representation during the lawsuit process. Also, if you need help negotiating a finance deal, your attorney can accompany you and provide guidance during formal negotiations.