Uber, one of the largest transportation companies in the country, has been accused of promoting subprime auto loans to increase its pool of drivers. Uber works much like a taxicab, except people in need of rides utilize a smart phone application to call for drivers. In January, it was estimated that Uber had more than 162,000 drivers working for the company.
According to the accusations, Uber uses subprime lending tactics to attract drivers with poor credit. One incident of the company and subprime lending recently appeared in the news outlet Al Jazeera, which covered the story of an Uber driver now suffering with weekly payments of $450! The driver, who has a poor credit history, heard about Uber’s vehicle-financing program and signed a lease through a company partner.
What the driver did not know is that the servicer for his lease was Santander Consumer USA, a company that had been required to pay $9.4 million for illegally repossessing more than 1,000 cars. Late last year, Santander Consumer USA was issued a subpoena by the U.S. Justice Department during an investigation into its subprime auto lending business.
Subprime auto loans offer borrowers very long lease terms with high interest rates and hidden late fees. For example, the Uber driver initially signed a 52-month lease with weekly payments of $227. After falling behind, the weekly payments are now $450 with late fees.
Why Should Borrowers With Subprime Auto Loans Contact A Bankruptcy Attorney?
Borrowers in situations like our Uber driver do have options to alleviate debt. At $450 a week, it is possible the Uber driver does not have the means to pay his other bills. In some situations, borrowers could benefit from an aspect of Chapter 13 bankruptcy known as the “cramdown”. Cramdowns allow borrowers to refinance car loans based on the current valuations of vehicles.
Cramdowns are one of several options that might be available to borrowers trapped by subprime auto loans. Contacting an attorney can help borrowers find additional options for resolving their debt problems.
The Sader Law Firm – Kansas City Bankruptcy Attorneys