The Consumer Financial Protection Bureau (CFPB) put its focus on consumer loans in the latest edition of its snapshot from the consumer complaint database.
The CFPB said it received about 38,500 complaints on consumer loans – including vehicle loans and leases, installment loans, pawn and title loans, and personal lines of credit – since it opened the database in July 2011.
However, consumer loans were not added to its complaint-handling capacity in March 2012, installment loans until November 2013, and pawn and title loans until July 2014.
Still, the bureau said that a review of its consumer loan complaints over time found that just over half of the complaints were about vehicle loans, with installment loans next at 31 percent. Almost half (43 percent) of the consumer loan complaints concerned the borrowers’ difficulty managing a loan, lease or line of credit.
Disclosures also were a concern, the report found.
“Some consumers complained of not receiving clear explanations of how fees and high interest rates would affect the total cost of their loans,” it stated. “Additionally, consumers complained they did not understand why their account balances did not decrease after making a large number of monthly payments.”
Specific to auto lending complaints, 47 percent concerned the borrowers’ difficulty managing a loan, lease or line of credit. Another 22 percent were concerning problems borrowers encountered when they were unable to pay.
Payment processing concerns were among the complaints highlighted in the CFPB report. “Consumers complained about payment processing issues, including not having their payments applied to their accounts in a timely and correct manner. Consumers also stated that they had their account debited for more than their monthly payment,” the report said.
Other concerns involved borrowers voluntarily surrendering their vehicles because they could not afford their payments, with many consumers owing more than the value of the car at that time. Many complained of repossessions happening with notice, the report said. “In some of these complaints, the repossessions occurred while the consumer was under the impression that they had successfully negotiated a repayment plan. Consumers also indicated that they were subject to high reinstatement fees,” it stated.
Other vehicle complaints including borrowers who purchased older cars with warranties, but later found that the warranties they believed were required did not cover basic repairs. Others said Buy Here Pay Here dealers checked their credit when considering them for a car loan, even though advertisements for their services said they would not. And some with leases complained about “having to pay what they felt were high wear and tear fees at the end of the lease term. These consumers explained that they disagreed with the wear and tear determinations and believed the process was unfair,” the report stated.
Auto loans have been recently on the CFPB’s mind, with the agency releasing a shopping sheet for auto loans as part of its Know Before You Owe initiative, which also includes student loans, credit cards and mortgages.
Overall, the report stated the bureau has handled more than 900,000 complaints since it opened the database. It handled 23,800 in May, about 1 percent more than in April. The three-month average of 24,405 complaints is up about 7 percent from the same time a year ago.