FSB is providing a lower interest rate, $500 off the amount owed, and continued aid to consumers with non-maintenance repairs.
DES MOINES. Iowa Attorney General Tom Miller announced today that FSB Financial, Ltd., has agreed to significantly improve the interest rate and other terms of Dan Nelson consumer auto loans that FSB bought from Nelson's financing company, South Dakota Acceptance Corporation, also known as Car Now Acceptance Company, or CNAC.
Miller said the agreement between his office and FSB will provide better loan terms to about 1100 consumers whose auto loans were purchased by FSB from Dan Nelson's financing company. The loans were originated at Nelson dealerships located in Des Moines, Council Bluffs and Sioux City. A similar agreement was reached with MetaBank last month, affecting about 1400 consumers.
"FSB has stepped forward to provide much better terms for consumers," Miller said. "FSB already has been implementing many of these improvements, and our agreement makes the terms official and universal for FSB's Dan Nelson customers. We appreciate FSB's cooperation."
FSB's Dan Nelson customers will benefit in several ways under the agreement:
- The annual interest rate on loans will be cut to 17.95%. (Almost all now are at 24.95%.)
- The principal amount owed will be reduced by $500 at the end of consumers' loans. (When consumers reach the last $500 in principal owed, their loans will be satisfied and FSB's lien will be released.)
- FSB will continue its current practice of aiding consumers with non-maintenance repairs to vehicles on a case-by-case basis.
- All FSB Dan Nelson contracts will be deemed current. Even if consumers haven't made payments for months, they won't have to pay late fees or past-due interest.
"This will provide significant relief and savings to hundreds of consumers," Miller said. The agreement applies to vehicles purchased in Iowa, regardless of the buyer's state of residence. South Dakota is expected to conclude a similar agreement on behalf of its consumers.
"Our office will continue to work with other financial institutions that now own loans originated by the Dan Nelson companies," Miller said, "to seek improved loan terms for consumers."
FSB sued Dan Nelson Automotive Group in May in state court in Texas, alleging that it was misled by Dan Nelson Automotive.
Information for consumers:
Consumers do not need to take any steps to participate in the agreement, and the agreement does not take away any private legal rights or remedies of consumers. The terms of consumers' loans will be changed automatically, and a letter will be issued to them very soon with detailed information about the agreement. Consumers will continue making the same payment amount at the same location, but the interest rate reduction and $500 credit will reduce consumers' total payments and shorten the length of loans.
Consumers with questions about the agreement with FSB may call FSB at 1-888-372-3868. Consumers also may call the Iowa Consumer Protection Division at 888-777-4590 (toll-free) or 515-281-5926. Consumers also may write to the Iowa Consumer Protection Division, 1305 E. Walnut St., Des Moines, Iowa 50319, or send e-mail to firstname.lastname@example.org. The Attorney General's web site is www.IowaAttorneyGeneral.org.
In January, Miller's office sued Dan Nelson Automotive Group, its financing company South Dakota Acceptance Corporation, and business partners Dan Nelson and Chris Tapken. The lawsuit, filed in Polk County District Court, alleged that the defendants engaged in violations of Iowa consumer fraud and consumer credit laws, and engaged in ongoing criminal conduct in connection with their sales of used motor vehicles in the three cities. (FSB is not a defendant in the suit.)
The agreement with FSB - and the similar agreement reached last month with MetaBank -- does not affect Iowa's consumer fraud lawsuit, which remains pending. "We alleged in our lawsuit that the defendants substantially harmed consumers," Miller said. "They are out of business now, but they still need to be held accountable for the alleged violations."
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