Anonymous
Anonymous asked in Business & FinancePersonal Finance · 2 months ago

Is this loan legal and if not what can I do?

United States. so I have an auto loan from a couple years back. The finance charges were not the best due to my middling credit score so my finance charges were kind of high. Now that credit score is due to lack of credit not lack of money. I had already expected that and since then I have always paid more than the minimum and have consistently been ahead 6-7 months. For some reason they decided to sell my loan to another institution because banks apparently do that. Then the stupid began. I was 7 months ahead, these people reset it to zero months then jacked up my interest rate and minimum payment to by 50% more. I thought it was just a one time thing and the months reset because new business and paid it. Then I get my next bill and it was even more so now it’s almost all interest and financing charges. Since I have been so vigilant about this loan and others I have increased my credit score by over 70 points since I got it so all that should go down. It’s like they sold it to one of those on the streetcorner payday loan scammers and they are deliberately trying to make me default on it. I have already contacted my old bank and nothings really happening on that end yet. Any other advice? It’s not a huge loan now so getting a lawyer would actually more expensive than paying the whole thing off which I can’t do in one lump sum. And if I do it will go back to normal in a few months due to the stupid interest rate and finance charges.

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  • A.J.
    Lv 7
    2 months ago
    Favorite Answer

    You did things non-standard and confused the heck out of what is legal and what is not. Your loan was the original contract, and when sold, it is still the original contract. When you pay more than the payment due, the additional money should be assigned to the PRINCIPAL of what is owed. You designate it that way to keep it simple and to your advantage. That reduces future interest and the loan is paid off earlier. You don't owe interest in the future. You owe interest on the current principal. The only way to figure this out is with the contract and your payment amounts and dates.

    "have consistently been ahead 6-7 months" - this is a sucker's view of someone who does not understand lending. When the loan was sold, this was not on record because it would be a pre-payment of principal and interest and the interest is future instead of past.

    You don't need a lawyer. You need an accountant, on someone capable of doing it.

    I have an MBA with A's in accounting courses and I barely understand what you were doing, so obviously everyone is lost.

    If you did not make a required payment, regardless of your pre-pays, the lender shows it as a default of contract and may have terms to raise your APR.

    If you submitted all of the details, it could be figured out.

    Collect your records as fast as possible to sort it out.

    A lawyer will cost you more, and likely you have no case.

    Loans with contracts that include paying ahead interest are a ripoff of people who don't understand how it works. Few auto loans have prepayment penalties.

    I just think the company that purchased your loan applied standard accounting. Can't state more without a lot of details.

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  • 2 months ago

    Selling a loan is legal and STANDARD PRACTICE.

    Changing the terms of the loan is not legal. Auto loans DON'T HAVE minimum payments. They are not credit cards. It is IMPOSSIBLE to be 7 months ahead on a loan without FIXED payments.

    Either the loan was NEVER SOLD, and the notices are from a SCAM OPERATOR, or you are FLAT OUT LYING.

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  • 2 months ago

    Paying more than the minimum does not mean that in another month, you can pay less and it will even out. That is not how it works. You will pay less interest because of less owing but, you always have to pay the minimum, every month, if you don't want to be behind in payments. Read your initial contract. I'm not sure that they - or even a new owner of the loan can change the terms of your initial contract. Read it and if they cannot legally do that, let them know.

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  • 2 months ago

    Good one for Judge Judy unless you had sign something that allow them to do that...she would love to take these guys on and see why they did it and did they have the rights too.....

    • A.J.
      Lv 7
      2 months agoReport

      I think it's an accounting issue and the new lender can't sort out the non-standard activity.

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  • Anonymous
    2 months ago

    Sounds like a load of BS.

    1. Just because they sell the loan does not mean the new lender can change the terms. (Unless it was an adjustable rate and Ive never heard of an adjustable rate car loan)

    2. You can't really pay ahead and be able to skip payments. You can pay ahead but you still owe a new payment every month.

    • A.J.
      Lv 7
      2 months agoReport

      This is true, but only states what isn't right.

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