Auto financing describes the process of obtaining a financial loan to purchase a car or another type of vehicle. Some think of auto financing a vehicle as only the full purchase of a vehicle; however, auto financing also applies to the leasing of a vehicle. Auto financing is often managed through a car dealership, auto finance companies, or auto loan finance companies that specifically provide car loans apart from a dealership. 

Auto loan laws govern auto loan financing to ensure the person attempting to obtain the loan is not taken advantage of. Auto financing is put in place because some people cannot afford to purchase a new or used car at once or they cannot afford the initial down and monthly payments. The process of obtaining a car loan involves several steps, including:

  • Finding a lender;
  • Researching the borrower’s credit background and eligibility;
  • Discussing and negotiating  loan terms, including interests rates and monthly payments;
  • The approval of loan amounts and details of repayment; and
  • Dispersal of funds to the borrower.

Once all the steps are in place, the person attempting to obtain the loan could be free to make an automobile purchase. However, 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. 

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. Car loan laws help protect against loan fraud and other problems with the borrower lender relationship. This takes place 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 quicker to identify points of dispute in the lending process. 

Listed below are some examples of 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 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 subject to fraud. The fraudulent loans can take many forms and can involve different types of scams. For example, an auto loan scammer might pretend to be a finance agent and give the borrower invalid 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 steal from the borrower.  

As with any type of crime, legal penalties can be severe and can often involve criminal charges or criminal restitution. If the fraud is severe enough there is also a possibility of jail time. If the person or party committing the fraud is a legitimate, licensed loan agent, they may also face other consequences, such as a loss of their professional loan license. 

In some cases, an auto loan fraud scheme might be more widespread and not just an isolated instance. If this is the case it may affect many borrowers and consumers. Sometimes, for instance, if an automobile loan company has fraudulent practices built into their policies, the entire business may be penalized. In such cases, class action lawsuits may be filed to consolidate the claims more efficiently. 

What Happens If Auto Loan Financing Falls Through?

There is a chance that an auto loan will be denied. If this happens it could be for many reasons. For example, it could be a problem with pre-approved financing, or it could be a mistake made by the car dealership. If you are denied an automobile loan you should be prepared and know what to do. The easiest option is to return the car to the dealer as you have probably been requested to do. 

An alternative option is to attempt to obtain financing on your own. If you already have a good deal on the price of the vehicle do not trust the dealership and obtain financing from a private lender. Furthermore, obtaining a loan from a private lender is more favorable to the borrower. 

Because you will be legally responsible for returning the vehicle, whatever solution you choose make sure you do not ignore the problem. This may lead to the vehicle being repossessed and the cost of the towing and recovery fees being charged to you. Finally, make sure you do not use violence to repossess your vehicle as this will lead to further charges and problems that will not help solve the problem. 

What is Needed to File an Auto Financing Lawsuit?

Like any lawsuit, an auto financing lawsuit will require a lot of paperwork and documentation to ensure accuracy. Auto financing lawsuits require support through large amounts of documentation and evidence. Fortunately, since auto financing is a highly transactional field, there will usually be a large amount of documentation of the process. 

Some forms of evidence can be used to support an auto financing claim. The claims may include loan contracts, company or agent certification documents, receipts, and payment receipts. 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, to compensate the plaintiff party for financial losses.

For instance, the borrower 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 revises its company policies regarding contract terms. 

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

If you are considering filing an auto financing lawsuit and have questions about your auto financing lawsuit you should consider discussing your options with an experienced finance lawyer. While it is possible to represent yourself, the majority of people who file an auto financing lawsuit in the United States do so with the assistance of an attorney. 

Furthermore, because filing an auto financing lawsuit can be a complex legal matter, finding the right attorney is important. An attorney can help you decide whether or not to file an auto financing lawsuit. They can help answer any questions or inquiries you may have regarding your potential legal claim. Finally, an attorney will also give you additional details on what exemptions you may be entitled to and ensure you are on the right path to a successful loan.