Used Car Dealer in Charlotte, NC Faces Federal Predatory Lending Lawsuit
The owner of two used car dealerships in Charlotte, NC faces a predatory lending lawsuit for his discriminatory lending practices between 2006 and 2011.
According to the filing, the business’s owner Zuhdi A. Saadeh allegedly targeted black customers through “reverse redlining” and inflated prices on his vehicles.
The predatory lending lawsuit was filed by the US Government and the state of North Carolina.
“Charging people inflated prices based on their race isn’t the way to do business in our state,” state Attorney General Roy Cooper said in a statement. “These allegations show outrageous behavior that should be stopped.”
According to allegations in the lawsuit, Saadeh’s “buy here, pay here” dealerships provided financing for the used vehicles, while Saadeh himself set vehicle prices, down payment amounts, and interest rates, which were outside of the industry-suggested retail prices. For example, in 2010 the dealership paid $7,610 at auction for a 2001 vehicle, but sold it for $12,900 – about 70% markup. The National Automobile Dealers Association suggested a 40% markup for the vehicle, which would have made it $10,625.
Reportedly, Saadeh’s dealership also charged that 2010 customer a 29% annual percentage rate, which is the highest possible rate allowed under North Carolina law.
The predatory lending lawsuit also alleges that Saadeh intentionally targeted black customers, perceiving them to have fewer credit options, making them more likely to accept his predatory lending contracts. Prosecutors say that Saadeh used racial slurs to refer to his black customers, as well.
The complaint also says that Saadeh’s businesses failed to provide reasonable notice of repossession of vehicles, sometimes repossessing even when the customer had not yet defaulted on the loan. The used car dealerships used Global Positioning System (GPS) devices to find the cars, even though customers had not been informed that there was a GPS installed in their vehicle.
The predatory lending lawsuit does not specify how many customers were affected, but an email from one law firm said: “Several hundred people, without regard to race, may have been subject to the practices.”
Saadeh’s attorney issued the following statement on Monday, January 20th:
“It is outrageous that the Department of Justice seems to suggest that just because Mr. Saadeh’s businesses are located in an African American community that they should be subject to a higher scrutiny than a business in a non-African American community… As a minority business owner himself, Mr. Saadeh is very aware of the harm discrimination can cause. We believe this to be a case of overstepping by the DOJ and Mr. Saadeh intends to vigorously fight these meritless claims.”
Are you a Victim of Predatory Lending?
Predatory Lending can become extremely harmful when aggressive tactics are used to convince a borrower to agree to those misleading conditions. It typically takes place when a lending company, broker, or even home improvement contractor takes advantage of borrowers by deception, fraud, or manipulation.
Predatory lenders can charge excessive fees, interest rates, and pre-payment penalties and often require balloon payments. These are usually made without considering the borrower’s ability to repay the loan amount
Although predatory lending does happen to all demographic groups, the most common people that are taken advantage of are elderly, minorities, and low-income homeowners. As a result, those victims then face financial crisis, including bankruptcy and home foreclosure.
The Strom Law Firm Can Help with Predatory Lending Lawsuits
If you believe you have entered into a loan agreement where the terms and conditions that appear predatory, it is important to act quickly to reduce the risk of harm. Call the Strom Law Firm, LLC today for a free consultation regarding your predatory loan case. 803.252.4800.