Quick and easy money. Without endorsements or guarantees. And, furthermore, it does not matter if the beneficiary is on a list of defaulters. All in exchange for your car, and not even that: you can continue using it as long as you pay a small fee. They are juicy alternatives to the traditional effort that companies like Flexicar (Flexiauto) offer their customers. From the association of financial users, Asufin, they denounce that these easy financing alternatives hide usurious credit whose interests can reach up to 400%. Courts throughout Spain have already ruled against these covert financial products, which with several successive contracts dodge the loan regulations.
“They cheat in various ways,” explains Marisa Protomártir, lawyer and legal adviser at Asufin: “In their advertising they talk about loans without guarantees, but the reality is that, when people request it, ‘without guarantees’ becomes that you have to sell the car to the company”. Users, desperate for quick money and with little legal knowledge, end up signing two contracts: one for the sale, with a repurchase option to recover the car, and another for the assignment —rental— of the vehicle, in order to continue using it despite which, technically, no longer belongs to them.
The key is that both the purchase and sale are simulated contracts, which hide the true nature of the business: lending money at skyrocketing interest without having to meet the requirements that the law imposes on credit. Protomártir points out that the regulations oblige companies that grant credits to deliver an informative brochure, with the TAE —the Equivalent Annual Rate, which reflects the real interest paid for a financial product—, an example of the fee or the duration of credit. “In order not to comply with the law, companies disguise the car rental loan,” says the lawyer. And, above all, they end up forcing the victims to pay interest well above the usual and expressly prohibited by the Usury Law.
Javier —fictitious name— suffered a setback in 2018 that left him with a debt of more than 6,000 euros. On the Internet he discovered the company Confiacar, which promised him quick and easy money. In a hurry, he got a loan of 2,500 euros in exchange for pawning his car, an Audi worth more than 9,000 euros. Without anyone explaining to him what he was agreeing to—and how much he would end up paying for that hidden loan—he signed two contracts: one to buy and one to rent. That is to say, a loan in which the purchase price was no more than the principal of the credit and another for which the interest payment was articulated. He ended up paying more than 5,000 euros, or what is the same, an interest of more than 100% for a loan of 2,500 euros.
At one point during the two years that Javier was paying the monthly fee of 250 euros that the company charged him for renting his car —which was no longer his—, he warned that he would not be able to pay that month. “They told me that there was no problem, that he would pay for the next one,” he says. What was his surprise when, after leaving work, he went to a car wash where he had left his vehicle and found that a tow truck had taken it away. He reported it, but since the car was no longer in his name, technically it had not been stolen. He ended up suing the company through a law firm and reached an agreement whereby he got his car back, but not all the money he overpaid.
nullity of contracts
A brief search of the company names of some of these companies results in a trail of judicial decisions that declare the nullity of the purchase, sale and lease, and that urge the companies to return the amounts paid as interest and put back the vehicle in the name of those affected in the General Directorate of Traffic. In one of them, issued by the Provincial Court of Madrid against Flexiauto on December 30, 2021, the judges affirm exactly what they denounce from Asufin: “The sale of the vehicle receiving money is the loan, and the assignment of use contract of it for a monthly price, is the repayment of the loan”.
In another sentence – this one issued by the Provincial Court of Ourense in November 2018 – it is stated how an affected person received 3,200 euros from Gedescoche at the signing of these contracts. From there, the interest accumulated, forming an unaffordable snowball: “At the time of the resolution,” the judges point out, “he had already paid the amount of 4,558 euros, that is, within a period of nineteen months he had paid the capital obtained, in addition to 1,558 euros in interest”. Or, what is the same, a rate higher than 27%. To which the Court adds: “At the same time and to recover ownership of his vehicle, the plaintiff also had to pay 3,357 euros, an amount set as the repurchase price.” And it does not stop there: the affected person’s account “would show a debit balance of 6,504 euros.” That is, more than 100% interest.
Antonio Aynat, CEO of Gedesco, Gedescoche’s parent company, points out to this newspaper that the judicial sentences that the company received for these contracts correspond to the time of the old management. “The contract model was wrong and we changed it”, he affirms, and defends that, although it continues to advertise on its website, Gedescoche no longer offers this type of financing, dedicating itself solely to renting. This newspaper has unsuccessfully tried to contact Flexicar, which continues to operate under other names, such as Carcor Automoción or Flexiauto Automoción 2017, according to lawyer Loleta Linares.
Linares, from the Gavín & Linares law firm, is the lawyer who handled Javier’s case, and has already started several claims against Flexicar, one of the leaders in the sector. She tells how the clients who come to her office are desperate and how these companies take advantage of their pressing needs for money: “A couple of months ago a boy came with terrible dark circles under his eyes. He felt persecuted ”. “The interest on the initial money increases and what you pay each month is not to cover the loan, but to use your own car,” she says. In addition, adds Protomártir, “if you refuse to pay you can be sued for having misappropriated the vehicle, which is not in your name.”
The engine of the business is despair: “They attract people who do not have the capacity to access a microcredit,” denounces Linares, who says that he has come across cases of people asking for 200 euros to make ends meet, committing themselves to return 250 euros four days later, when they receive their salary. “50 euros in four days is 25% interest. In annual terms they are paying 4,000%”. For someone who is banned from the normal financing channels —or whose economic conditions do not make them a desirable client—, these loans in exchange for their car are a desperate way out: “They end up selling it to these companies and, since they need it, to work, they try to pay whatever they can”, laments the lawyer.
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