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November 8, 2012

Cedar Rapids Used Car Dealer Agrees to Refunds, Changes afterState Alleged Loan Disclosure, Fee & Contract Violations

(DES MOINES, Iowa)  A Cedar Rapids used car dealer has agreed to refund more than $30,000 to consumers and stop what Attorney General Tom Miller alleged were excessive late fees, loan disclosure violations, and illegal consumer loan contracts.

In an agreement with the Consumer Protection Division, called an Assurance of Discontinuance, Miller alleged that C.R. Cars violated the federal Truth in Lending Act in almost all of the documents that the Consumer Protection Division reviewed.  The Truth in Lending Act requires that a lender conspicuously disclose certain pieces of information to a borrower before extending credit, including the annual percentage rate (APR), the term of the loan, and the total costs to the borrower.

The violations resulted in consumers paying larger finance charges than C.R. Cars disclosed in its agreements, and the dealership repeatedly exceeded legal finance charges.

In the agreement the Consumer Protection Division alleged that C.R. Cars:

Intentionally misrepresented the character, extent, or amount of the debt;

  • Charged and received late fees for delinquent payments that exceed delinquency fees allowed by law;
  • Contracted for and received default charges in excess of reasonable expenses incurred in collecting on debts or those charges specifically authorized by law;
  • Required consumers to enter into financing agreements that illegally provide for the payment of the dealership’s attorney’s fees in cases of default;
  • Required consumers to sign an agreement authorizing the dealership to take the vehicle “without necessity of court order or any judicial process;”
  • Failed to provide notices of right to cure prior to repossession, as the law requires.


C.R. Cars agrees to correct the issues outlined in the agreement, resolve overcharges, and to provide fair treatment and settlements with affected customers.  Under the agreement, C.R. Cars also agrees to:

Modify its vehicle purchase and financing contracts so that they conform with the Iowa Consumer Credit Code and no longer finance consumer motor vehicle purchases or engage in consumer credit transactions;

  • Refund all excessive delinquency fees;
  • Refund all repossession fees in cases of improper repossessions;
  • Refund all illegal or excessive finance charges.


Miller also alleged that C.R. Cars failed to file a required consumer creditor notification with the state.  The dealership has since filed that notification and paid all required fees, including late fees, and agrees to stay current during all remaining open consumer credit transactions.

Miller thanked the Iowa Department of Transportation’s Office of Motor Vehicle Enforcement for its assistance in investigating the case.

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