This Brooklyn Grandmother Fought Back Against a Shady Used Car Dealer and Won

Rhoda Branch, 52, lost thousands of dollars and her mobility when a used car dealer took her for a ride. But with the help of a consumer protection group, she fought back — and won.

This story is Part II of a MagnifyMoney investigation into the risky business of subprime auto lending. Read Part I here

Rhoda Branche’s rocky road began with Superstorm Sandy in 2012. After the hurricane totaled her car, she turned to Giuffre Motors in Brooklyn to shop for a new vehicle.

“They said they would help me,” recalled Rhoda. “They were very friendly – and then they just starting pushing the papers through.”

She said the dealership promised her $4,000 in incentives to buy a used 2004 Volvo SUV – and offered to arrange a loan for her.

According to a copy of the contract obtained by MagnifyMoney, the incentives were missing from the sales contract Rhoda signed. The financing was no bargain either – a subprime loan with an annual interest rate of 23.5%.  Subprime customers are typically high-risk borrowers who pay more in finance charges because of poor credit histories.

Worst of all, Rhoda’s $13,000 SUV would soon stop running. Instead of repairs, the dealership gave her the runaround.

“It was a vehicle that shouldn’t be on the road,” Rhoda said. “They just said the vehicle was fine. It looks good on the outside, but it was a lemon.”

In desperation, she took the Volvo to other mechanics and spent $3,000 from her own pocket, but the SUV kept breaking down. As a last straw, she surrendered the title of ownership to the finance company that held her loan.

Without a car, it often takes Rhoda two buses, a subway ride, and 90 minutes to travel nine miles from her apartment in Coney Island, N.Y., to a hospital where she frequently seeks treatment.

“I have to take public transportation,” said Rhoda, who suffers from injuries that required operations on both knees. “It is very time-consuming. It causes a lot of pain. I have pains all over my body because I had surgery.”

Not the Only One

“Many sellers of cars to people with subprime credit sell you junk. And they know they’re selling you junk,” said Remar Sutton, a former car dealer turned consumer advocate. He wrote about the tricks of the used car trade in his book, “Don’t Get Taken Every Time.”

“They sell you a car they know you cannot pay for, or they know will break down, and they repossess it because you can’t pay for it or it breaks down,” said Sutton. “And then they sell it again.”

Rhoda did not know she was the latest in a long line of customers who were victims of the dealership’s unethical sales tactics.

The New York attorney general sued Giuffre in 2010 on behalf of 42 customers who claimed they were cheated. In Kings County Supreme Court, a judge ordered the dealership to pay more than a half-million dollars in fines and restitution for its illegal business practices.

Giuffre had “a common practice of strong-arm sales methods and unethical conduct,” wrote Judge Bernard Graham in his 2011 decision. “The list of grievances is extensive and unsettling.”

Rhoda was one of at least one dozen consumers who filed complaints against Giuffre with New York City’s Department of Consumer Affairs. Under pressure from the DCA, Giuffre agreed to pay $180,000 in fines plus $100,000 into a restitution fund as part of a consent order in April 2014, nine months after Rhoda’s complaint.

From the settlement, Rhoda confirmed she received roughly $4,600 in restitution. And two months after the consent order, Kings County Civil Court dismissed a $5,000 claim against Rhoda by a finance company that tried to collect the unpaid amount of her car loan.

Owner John Giuffre could not be reached for comment. His lawyer did not respond to MagnifyMoney’s interview requests.

As a result of the DCA consent order, Giuffre was forced out of the car business in New York City. His last dealership closed in December 2014; its doors and windows remain boarded shut. But consumers have plenty of reasons to remain cautious.

“There are, unfortunately, thousands of companies in America that will deliberately sell you cars that they know are going to break down,” said Sutton.

Rhonda hopes she can afford to buy another car someday. But she’s afraid of being ripped off again.

“Now I’m very skeptical going to other places because I remember what I went through,” she lamented. “I don’t know what dealership I should trust when I’m ready to buy another vehicle.”

How to Buy a Used Car Without Being Cheated

Shop for financing before you look for a vehicle: The subprime interest rate a credit union can offer may be half of what a car dealer charges you. Don’t assume that your poor credit history means you won’t have a shot at getting a loan from a reputable lender. It’s perfectly fine to get your own financing outside of a dealer — and, as our story shows, it’s often much more affordable. To make matters better, if you come in with a verified offer from another lender, the dealer has an incentive to try to beat their offer.

Check your credit score yourself: Don’t take a dealer’s word on it when it comes to your credit. Your score may be good enough to qualify for a better rate on a loan elsewhere, but the dealer may not want you to know that.  You can check your credit score on a number of sites for free, including the Discover Scorecard. And again, if you shop around for rates before you go to the dealer, you will know exactly what rates you deserve — and when they are offering you a bad deal.

Buy a car that works: Bring a mechanic or a knowledgeable friend to check it out before you decide. You can also check the vehicle’s background by getting a vehicle history report through resources such as the National Motor Vehicle Title Information System, CARFAX, and AutoCheck.

Buy a car you can afford: If a dealer makes promises, be sure to get it in writing. Go in with a firm idea of what kind of car you want and how much you can afford to pay.

And slow down: Never sign a contract in a hurry. Dealers may be friendly, but they’re not really your friend. To double-check a dealer’s reputability, check out their reviews and rating on the Better Business Bureau website.

Additional reporting by Mandi Woodruff

The post This Brooklyn Grandmother Fought Back Against a Shady Used Car Dealer and Won appeared first on MagnifyMoney.

12 Cars That Depreciate Quickly (& Are Good to Buy Used)

cars-that-depreciate-quickly

If you’re in the market for a new car, you may be tempted to drive a brand-new one off the lot. After all, many manufacturers are already releasing their feature-packed 2017 models, and the weather hasn’t even turned cold yet.

But, before you do, consider this: A new study by iSeeCars.com, an automotive data and research company, found that buying a new car is not always going to get you the best bang for your buck. In fact, the company discovered that purchasing some cars that are just a year old can provide consumers with substantial savings.

“Most people know new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to determine which used cars experienced the largest price drops compared to their new models,” Phong Ly, the CEO of iSeeCars.com, said in a press release.

To establish the savings, iSeeCars.com analyzed the more than 14 million cars sold from August 1, 2015 and July 31, 2016, excluding models with fewer than 250 new and 250 used cars sold. The average asking prices of year-old cars were compared to those of new cars from the same model, according to the release, with the difference in price expressed as a percentage of the new model average price. This percentage was then compared to the overall percentage difference across all models.

Using this data, iSeeCars.com researchers found that the average price difference between a new car and a lightly used car was 21.2%, ranging from $6,099 to $19,966 in savings. (Note: For this study, a lightly used car is defined as a vehicle from the 2014-2015 model years with mileage within 20% of 13,476, the average annual miles traveled in the U.S., according to the Department of Transportation.)

But it isn’t all cars — iSeeCars.com established a dozen cars that offer the best value when purchased lightly used instead of brand new, with price differences between 31.2% and 34.6% — at least 1.5 times more than the overall average. Below are those 12 cars.

1. FIAT 500L

Price Difference: $8,096 less
Percentage Price Difference: -34.6%

2. Lincoln MKS

Price Difference: $16,039 less
Percentage Price Difference: -34.5%

3. Volvo S60

Price Difference: $14,204 less
Percentage Price Difference: -34.4%

4. Kia Cadenza

Price Difference: $12,940 less
Percentage Price Difference: -34.3%

5. Mercedes C250

Price Difference: $15,247 less
Percentage Price Difference: -34.3%

6. Nissan Maxima

Price Difference: $12,469 less
Percentage Price Difference: -34.0%

7. Lincoln MKS + MKZ Hybrid

Price Difference: $14,177 less
Percentage Price Difference: -33.8%

8. Jaguar XF

Price Difference: $19,966 less
Percentage Price Difference: -32.3%

9. FIAT 500

Price Difference: $11,106 less
Percentage Price Difference: -31.9%

10. Cadillac ATS

Price Difference: $6,099 less
Percentage Price Difference: -31.8%

11. Chrysler 300

Price Difference: $13,351 less
Percentage Price: -31.7%

12. Buick Regal

Price Difference: $11,525 less
Percentage Price Difference: -31.2%

If you’re considering purchasing a new car — whether it’s straight from the manufacturer or simply new to you — it’s a good idea to make checking your credit part of your shopping process. Knowing where your credit stands can help you get an idea of what terms and conditions you may qualify for with your auto loan. You can see two of your credit scores for free, updated every 14 days, on Credit.com.

Image: AdrianHancu

The post 12 Cars That Depreciate Quickly (& Are Good to Buy Used) appeared first on Credit.com.

What Is the Average Used Car Loan Rate?

average-used-car-loan-rate

More people are opting to lease their new set of wheels instead of purchase them, according to Q1 2016 data from Experian.

The number of auto loans grew to an all-time high, with leasing surpassing 30% of all new consumer vehicle sales. But the interest rates consumers are getting on these loans has stayed low, especially for used cars. In fact, Experian reported that average loan rates saw some increases, but still remain historically low.

Loan rates for a new car in Q1 of 2016 was 4.79%, up from 0.08% a year prior. Franchise used rates are 7.81% (down from 8.03% in Q1 2015) while independent used rates are 12.22% (down only 0.01% from Q1 2015).

The Experian Automotive scoring deems prime consumers as those with scores of 661 to 850, nonprime users with scores of 601 to 660, and subprime users as those with scores of 300 to 600. Consumers on all risk tiers are increasingly choosing to lease over purchasing cars, according to the report.

The number of prime consumers choosing used vehicles increased from 31.5% in Q1 2015 to 36.3% in Q1 2016. The number of nonprime and subprime consumers also saw increases, from 30.1% to 34.2% and 22.5% to 27.2%, respectively.

Experian reported that the increased number of prime consumers choosing used vehicles resulted in “score increases, greater percentages of used financing in the prime risk tier and lower average used rates.”

Getting a Car Loan

If you’re thinking about buying a used car and taking out an auto loan to do it, it’s a good idea to review your credit first. Having a good credit score can help you qualify for better terms and conditions on your financing. (To find out where your credit stands, you can see two of your credit scores for free, updated each month, on Credit.com.) And when you’re figuring out how much you can afford, remember to consider not only how much your monthly car payment will be but also how much the loan will cost you in the end, by considering the interest rate and length of the loan term. (The longer the loan term, the more interest you will pay.)

If you aren’t happy with what you see, don’t worry — you may be able to improve your credit scores by paying down any big credit card balances, disputing errors and limiting credit inquiries until your score has had time to rebound.

[Offer: Denied from a loan? It may be because of a low credit score due to errors on your report. Lexington Law can help you navigate the credit repair process so you can get back on track. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Auto Loans:

Image: Yuri_Arcurs

The post What Is the Average Used Car Loan Rate? appeared first on Credit.com.

What Is the Average Used Car Loan Rate?

average-used-car-loan-rate

More people are opting to lease their new set of wheels instead of purchase them, according to Q1 2016 data from Experian.

The number of auto loans grew to an all-time high, with leasing surpassing 30% of all new consumer vehicle sales. But the interest rates consumers are getting on these loans has stayed low, especially for used cars. In fact, Experian reported that average loan rates saw some increases, but still remain historically low.

Loan rates for a new car in Q1 of 2016 was 4.79%, up from 0.08% a year prior. Franchise used rates are 7.81% (down from 8.03% in Q1 2015) while independent used rates are 12.22% (down only 0.01% from Q1 2015).

The Experian Automotive scoring deems prime consumers as those with scores of 661 to 850, nonprime users with scores of 601 to 660, and subprime users as those with scores of 300 to 600. Consumers on all risk tiers are increasingly choosing to lease over purchasing cars, according to the report.

The number of prime consumers choosing used vehicles increased from 31.5% in Q1 2015 to 36.3% in Q1 2016. The number of nonprime and subprime consumers also saw increases, from 30.1% to 34.2% and 22.5% to 27.2%, respectively.

Experian reported that the increased number of prime consumers choosing used vehicles resulted in “score increases, greater percentages of used financing in the prime risk tier and lower average used rates.”

Getting a Car Loan

If you’re thinking about buying a used car and taking out an auto loan to do it, it’s a good idea to review your credit first. Having a good credit score can help you qualify for better terms and conditions on your financing. (To find out where your credit stands, you can see two of your credit scores for free, updated each month, on Credit.com.) And when you’re figuring out how much you can afford, remember to consider not only how much your monthly car payment will be but also how much the loan will cost you in the end, by considering the interest rate and length of the loan term. (The longer the loan term, the more interest you will pay.)

If you aren’t happy with what you see, don’t worry — you may be able to improve your credit scores by paying down any big credit card balances, disputing errors and limiting credit inquiries until your score has had time to rebound.

[Offer: Denied from a loan? It may be because of a low credit score due to errors on your report. Lexington Law can help you navigate the credit repair process so you can get back on track. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Auto Loans:

Image: Yuri_Arcurs

The post What Is the Average Used Car Loan Rate? appeared first on Credit.com.