Lexus Loan - A Cautionary Tale

Sometimes there’s a large gap between what’s merely legal and what’s right. Ideally, businesses would always do the right thing, even if they are not legally obligated to. However, not every business functions to that standard.

It seems that Lexus is one of those companies that choose to hide behind the law instead of extending a hand in customer service. Then again, Lexus and other big companies also need to turn a profit and serve their employees and investors. They can’t afford to negotiate on every heartbreaking story. So we ask you, the loyal TrustDALE readers, what you think would have been the right thing to do.

Loyal Customers

Donna Murrel-Speed and her husband Henry were loyal Lexus customers for years. They owned several Lexus vehicles over the years. When Henry began to experience multiple health problems, Donna and Henry purchased a Lexus SUV to accommodate Henry better. It served them well until, after a long battle, Henry passed away.

Shortly after Henry passed, Lexus contacted Donna. The car loan had been under Henry’s name, and Henry did not have a will. Lexus gave Donna three options: purchase the car outright, return the car to Lexus, or refinance the car in her name. Donna was a bit taken aback at the sudden possible loss of her car. Based on her love of the vehicle and the fond memories it held, Donna decided to keep the car and refinance the loan. However, she never expected what would happen next.

A Huge Loan

Donna and Henry had been paying a $29,000 loan on the vehicle in Henry’s name. But when Donna went to refinance the car in her name, she got a big surprise. What had been a $29,000 loan based on Henry’s credit became a $53,000 loan based on Donna’s admittedly lower credit score.

Donna contacted us at TrustDALE, and we contacted Lexus. Unfortunately, Lexus would not budge. They were entirely within the law in all of their actions. Donna did not have the right to continue on the terms of Henry’s loan, and Lexus gave her appropriate terms for the new loan based on her credit score.

So was there any wiggle room?

Maybe. But the answer is a bit complicated. We shared this story on social media and got a variety of responses. We would love for Lexus to do what’s right and not put undue stress on a recent widow, and many of our followers agreed. But others pointed out that Lexus is a business, not a charity, and they have obligations to their employees and shareholders. Finally, some followers helpfully clarified that the terms of a car loan are up to the bank making the loan, not to the car manufacturer or even the dealership. All of these points add to the complicated picture of Donna’s dilemma.

Protect Yourself

While we can’t force Lexus to change their behavior, we can make some suggestions on how to protect yourself from this kind of situation. First, having a last will and testament will save your family or other survivors from a lot of grief. Estate planning is not just for the wealthy and the very old. If you haven’t already, we suggest putting together legally binding instructions for how to handle your finances after your passing, no matter your age, wealth, and health. A will can also handle other issues, such as powers of attorney for end-of-life decisions, or what to do if you are survived by minor dependents. 

In addition to setting up a last will, it is always a good idea to carry at least some life insurance. How much life insurance you need and the best type of insurance is an individual decision. Your estate planner can help you better understand your options.

Finally, good credit is valuable. Even if you don’t plan on taking out a loan, maintaining your credit should be a priority. Sometimes your credit can be affected by situations beyond your control. But there are some ways to avoid needlessly downgrading your credit score. Make sure you don’t let bills linger, especially credit cards and loan payments. Most types of debt have minimum payments and autopay options. We don’t necessarily suggest making only minimum payments, but creating an autopay for the minimum payment can give you some backup in case you accidentally miss a payment. Again, an estate planner can help you build and maintain good credit.

What Would You Do?

Since Lexus wouldn’t budge on Donna’s loan, and they were within their legal rights, Donna has little recourse. But at TrustDALE we know that just exposing unethical or uncompassionate business practices can have a substantial effect. We’re sharing this story both as a cautionary tale to consumers and a wakeup call to Lexus.

TrustDALE is here to call out poor customer service and share it with the world.