Consumer Reports writes today:
Auto repair shops affiliated with well-known brands—including AAMCO, Big O Tires, Grease Monkey, Jiffy Lube, Meineke, Midas, and Precision Tune Auto Care—are steering unsuspecting customers into loans charging up to 189 percent interest, according to a study by consumer advocacy groups including Consumer Reports.
While most states have interest-rate limits to stop lending practices such as this, a company can evade state regulations by teaming up with a bank in a state where no such rate-cap laws exist. This practice, known as “rent-a-bank,” exists in a legal gray area. In this case, the auto repair shops are offering the loans through EasyPay Finance, which runs the loans through Transportation Alliance Bank (TAB,) based in Ogden, Utah, where high-interest rate-caps don’t exist.
Emergency auto repairs can be expensive. One in 3 U.S. drivers isn’t able to pay the average $500 to $600 cost, according to a 2017 survey by the AAA automotive group. The consumer advocates say that questionable business practices by EasyPay Finance and high interest rates make those payments even worse.
The full article, which also includes suggestions for consumers, is here.
