Exeter Finance Facing Class Action Lawsuit Over Alleged Hidden Finance Charge, Unlawful Repo Practices

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Exeter Finance faces a proposed class action lawsuit that claims the auto loan financer unlawfully conspires with dealers to raise the prices of their vehicles to accommodate the lender’s hidden finance charge.

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According to the 22-page fraud lawsuit, Exeter charges auto dealers a certain discount fee when it provides financing services to a buyer. The suit shares that a dealer can recoup the cost of the discount fee, which Exeter secretly bakes into the “amount financed” section of a consumer’s retail installment sales contract (RISC), by increasing the price of a vehicle.

The case contends the discount fee is thus a hidden finance charge that’s passed onto consumers without their knowledge.

In addition, the complaint asserts that if the fee were properly disclosed, as required by law, it would raise a loan’s stated annual percentage rate (APR) to a potentially usurious level.

The plaintiff, an Ohio resident, claims Exeter in 2013 financed his purchase of a 2011 Hyundai Accent from a local dealership. Per the man’s RISC, the total amount financed by the lender was $14,186.84, at an APR of 24.95 percent, the filing says.

The lawsuit alleges that the discount fee Exeter charged the auto dealer for the transaction was, in truth, passed onto the plaintiff without his knowledge through an artificially increased vehicle price.

Moreover, the suit argues that the undisclosed fee, which the man would not have been assessed had he paid cash or possessed strong enough credit to allow him to obtain prime financing for his purchase, meant that the APR listed on his contract was significantly understated.

“Had Exeter disclosed the fee as a finance charge, the APR on the contract would have substantially exceeded the 24.95% represented and the 25% allowable by law, making the disclosures on the contract false and the contract itself usurious,” the case relays.

The complaint further contends that Exeter, upon repossession of a vehicle, will send the borrower a form notice that overstates the amount required to be paid to reinstate their loan, in violation of the Retail Installment Sales Act (RISA).

After the lender repossessed the plaintiff’s car in June 2016, it sent the man a “notice of reinstatement” that improperly included the full $450 repossession cost in the amount required to reinstate the man’s loan, the filing claims. By law, only $25 of the repossession cost needs to be paid to reinstate a loan, with the remainder added to the balance of the loan, the suit explains.

Finally, the lawsuit charges that Exeter violated the RISA and Ohio law by failing to include all requisite information on the “notice of sale” and by selling the plaintiff’s repossessed vehicle for less than the minimum bid price stated on the document.

The Exeter Finance auto loans lawsuit looks to represent anyone in Ohio who, since May 21, 2024, purchased a vehicle primarily for personal or household use and entered into a RISC with an Ohio dealership where the RISC was assigned to the defendant; where Exeter charged a discount or loan fee, and/or the selling dealer raised the sales price of the vehicle to accommodate such a fee charged by the lender; and had the discount or loan fee been disclosed as a finance charge, the resulting APR would exceed 25 percent.

The suit also seeks to cover those whose vehicles were repossessed by Exeter, where the lender sent them a “notice of reinstatement” that included the full amount of the repossession charges in the amount demanded to reinstate the loan.

In addition, the case aims to represent individuals who were sent a “notice of sale” by Exeter that stated a minimum bid price for the sale of their vehicle, which was subsequently sold for less than the listed price.

Lastly, the lawsuit looks to cover those who Exeter sent a “notice of sale” after the repossession and disposition of their vehicles, where the notice failed to state the day of the week of the sale.

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