USURY ON THE REZ

(From the Glacier Reporter, Sept. 21, 2006)

Imagine this scenario. A 59-year-old man living in Browning, named John, wakes up to find that his truck, a used 1998 F-150 is gone. Earlier that night XYZ Auto Sales illegally repossessed his truck after John missed the last two payments on his high interest auto loan. XYZ Auto says that they repossessed the vehicle legally off the reservation in Albertson’s parking lot in Cut Bank. The unlucky man in Browning was the victim of the common scheme of predatory lending.

The Blue Book value on John’s F-150 was $13,999. After paying $2,000 for a down payment, John agreed to an $11,999 auto loan financed by XYZ auto, with an interest rate of 19.65 percent. He had paid all but two of 72 payments, owing only $700 the night his car was illegally taken. With the high interest loan, John’s F-150 ended up costing him nearly $23,000, and only to have it repossessed. John was the victim of a predatory loan targeted at his community. Although this story was fictional, it is a story often told by real people on the Blackfeet Reservation.

XYZ Auto Sales is based out of Billings but has a smaller office in Kalispell located closer to the Flathead and Blackfeet reservations. This business, like many other car dealerships, preys on communities more susceptible to economic exploitation. Their loans are structured to extract the highest amount from Native Americans. Using high interest, misinformation and hidden costs, dealerships like these funnel money away from the community. After repossessing cars they are once again offered to vulnerable citizens to begin another loop.

What can you do? Be a smart consumer. You should know what the true Blue Book value of the car you want to purchase (online at www.kbb.com). Understand what the loan’s conditions are and any hidden fees. Do not pay an unfair price. An aggressive car salesman should alert you that this deal may not be smart for you. Above all take your time and do not be rushed. Go to the dealership with the willingness to leave without a car. If you are unsure of anything in the agreement, wait.

Oftentimes used cars break down soon after being purchased. It is important for you to continue to make payments on the vehicle. Even if you received a bad deal, the car-salesman can and will repossess the vehicle. If you find yourself in trouble with a car dealership, you can contact the Montana Legal Services Association Hotline for free advice at 1-800-666-6899. (If you are in Montana.)