Exeter Finance Hit With Class Action

Exeter Finance faces a proposed class action lawsuit accusing the auto loan financer of conspiring with dealers to inflate vehicle prices to cover a hidden finance charge.

The 22-page lawsuit claims Exeter charges dealers a discount fee for financing, which is then secretly added to the “amount financed” section of the buyer’s retail installment sales contract (RISC). This fee is passed onto consumers through higher vehicle prices, effectively making it a hidden finance charge.

The suit also asserts that proper disclosure of this fee would raise the loan’s annual percentage rate (APR) to potentially illegal levels.

The plaintiff, an Ohio resident, alleges Exeter financed his 2013 purchase of a 2011 Hyundai Accent. His RISC indicated a total amount financed of $14,186.84 at a 24.95% APR. However, the lawsuit claims the discount fee was passed onto him through an increased vehicle price, making the disclosed APR 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 argues.

The complaint also claims Exeter violates the Retail Installment Sales Act (RISA) by overstating the amount required to reinstate loans after repossession. After repossessing the plaintiff’s car in 2016, Exeter allegedly sent a reinstatement notice including the full $450 repossession cost, although only $25 is required by law.

The lawsuit further charges Exeter with failing to include all required information on the “notice of sale” and selling repossessed vehicles for less than the minimum bid price stated on the document.