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Customers of Defunct Dan Nelson Auto Group Get Lower Interest Rates

December 6, 2005

DES MOINES, Iowa –- Iowa Attorney General Tom Miller announced that Auto Receivables Trust will lower the interest rate on loans to 17.95 percent and consider loans paid in full when buyers reach the last $500 in principal owed for about 250 consumers who bought cars from the recently defunct Dan Nelson Automotive Group, according to The Des Moines Register. A majority of those loans are now at 24.95 percent.

Operating from used car lots throughout Iowa, Nelson Automotive sold thousands of vehicles whose loans were in turn bought by out-of-state finance companies. Amid uncertainty over the bankruptcy that was filed by the company last spring, many of those car buyers had quit making payments.

Private investors had organized trusts that purchased a number of loans generated by Nelson Automotive, three of which are represented by EMCC Inc. of Pembroke, Mass., who serviced the loans and collected payments from buyers and negotiated new terms with Iowa authorities. Executives for EMCC said that the investors in the trust were unaware of allegations that many of the cars sold were of poor quality until after Nelson filed for bankruptcy, at which time they acted on their behalf to reform the loans.

The Iowa attorney general’s office is also negotiating with other lenders to make these loans more affordable to buyers. And, a state consumer fraud lawsuit lodged against Nelson Automotive is still ongoing, with more 400 customers filing complaints saying that they were pressured into paying inflated prices for vehicles that were in poor working condition.

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