Consumers lured Into predatory car repair loans


Source: Octavio Blanco, Consumer Reports

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.

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