Auto Loans Auto Loan Contract vs Auto Financing Claim

ICHen

New Member
Jurisdiction
California
We have an auto loan since 2011. Our contract states that before the last scheduled payment is due, we were to receive notification of any changes in what we owe. Last scheduled payment was due on 07/14/2017.

According to the contract,

"How Late Payments or Early Payments change what you must pay:
...Changes may take the form of a larger or smaller final payment or, at our option, more or fewer payments of the same amount as your scheduled payment with a smaller final payment. We will send you a notice telling you about these changes before the final scheduled payment is due."


Our auto loan contract matured on 06/30/2017, with the final scheduled payment due on 07/14/2017. The only notification we received was a monthly statement with an extra payment in the amount of $475.60 in addition to the last scheduled payment. Not knowing where they came up with this amount, we wrote their offices for clarification but have been all but ignored.

E-mails and calls came pouring in, sometimes they called twice daily. I responded to one e-mail on 09/14/2017, telling them that we were disputing and requesting clarification for the $475.60 and to please not call until this is resolved. On 09/20/2017 I received an e-mail in return telling me that there was still a balance not for $475.60 but for a whopping $3,700 still due that's accruing interest! What??

Is this even legal? It appears there's a breach of contract on their part.

My question is, are we only obligated, according to our contract, to pay the amount they 'notified' us of before the last scheduled payment is due for them to release the lien, which is $475.60?
 

Attachments

  • Fit_Contract_Partial001.pdf
    987.3 KB · Views: 2
My guess is that the loan has gone to the collections department or to a collection agency and they are tacking on attorney fees (actual or expected) that are allowed by your contract, and other costs besides interest.

As long as they say you are in default I don't see any breach of contract by them. I don't see anything in your contract that says they have to send you anything but the amount of the final payment.

Unfortunately, what you might be "obligated" to pay at this point is entirely up to the finance company.
 
As long as they say you are in default I don't see any breach of contract by them. I don't see anything in your contract that says they have to send you anything but the amount of the final payment.

You didn't read the part in the contract where they "will" notify us of any changes in what we must pay before the final scheduled payment (which we paid on time, as we've done in the preceding 6 months) in what we owe? It's in bold and in red.

I didn't know lenders could legally spring costs and such on borrowers whenever they choose, especially when they promise, in their contract, that they'd notify the borrower of any changes in what the borrower must pay. I thought the contract was binding on both parties. Excuse me if I read your reply wrong, but you make it sound as if the contract is only binding on one party--the borrower.
 
They did notify you of the charge/change of $475 before the last payment was due in the form of your statement.

But at any point in the loan period, did you pay late? If so, it is very possible that is simply extra interest since your amortization schedule/payment is based on paying the principle owed on time. Yes, they can tack on late fees but those don't generally count towards the extra interest. And yes, it could easily add up to $475 especially if you paid late early in the loan where you were paying more interest than principle.

Had you been tracking your payments and your balance, you might have seen the summation of the difference each month. But generally it's not going to be one charge, but a series of differences in the balance owed due to how you were making payments (like I stated above and they stated in that clause). It is possible the notice was either each monthly paper statement OR an online version of such. If you ignored it for the life of the loan, I am not sure there is much you can do but to ask for an accounting of all payments and hope they provide one.
 
They did notify you of the charge/change of $475 before the last payment was due in the form of your statement.

Yes, they did, and we don't have a problem paying that. It's the $3,700 we're suspicious about.

But at any point in the loan period, did you pay late? If so, it is very possible that is simply extra interest since your amortization schedule/payment is based on paying the principle owed on time. Yes, they can tack on late fees but those don't generally count towards the extra interest. And yes, it could easily add up to $475 especially if you paid late early in the loan where you were paying more interest than principle.

Yes, but we always kept in contact with them via e-mail (saved ALL e-mails), asking for the total amount they needed (incl interest, penalties, etc.) in order to bring our account current. They always complied, stating the number and that it would bring our account current, and we always paid. It's why it's so strange that 'interest, penalties, etc' are tacked on at the backend. We never received a deferment although we asked because of two tragic deaths in the family last year. They never responded to my e-mails and it was ultimately not necessary to have a deferment but we paid as agreed.

Had you been tracking your payments and your balance, you might have seen the summation of the difference each month. But generally it's not going to be one charge, but a series of differences in the balance owed due to how you were making payments (like I stated above and they stated in that clause). It is possible the notice was either each monthly paper statement OR an online version of such. If you ignored it for the life of the loan, I am not sure there is much you can do but to ask for an accounting of all payments and hope they provide one.

We received monthly paper statements but there was never a balance shown on any of them, which I thought was strange. My son had a car payment with another lender and they showed the balance still due on each and every one of his statements. Not so with us.

There were also no differences, no extra charges on any of them that would notify us about past-due interest, penalties, etc., just the monthly payment and, if paid after the 10-day 'grace period', the late charge. If I knew the payment would come even a single day late to them, I always paid the late charge when I made the monthly payment. I never sent in a payment, knowing that it would come in even a single day late, and not pay the late charge in advance.

Thank you so much for responding, hrforme. I feel much better.
 
Interest does still accrue in the 10 day grace period and generally that interest would not be covered by the late charge. Not sure that your definition of bringing the loan current would include any extra interest during the grace period because it seems that it was just tacked onto the loan balance owed.

I will say that $3700 is going to increase the longer it takes for you to resolve the original $475 through late fees, interest and collection/attorney fees. You are now more than 2 months late on the last payment. Is there any reason you haven't gone ahead and paid the last payment and the $475 since you claim you aren't disputing that now although it was what you were originally disputing?
 
I will say that $3700 is going to increase the longer it takes for you to resolve the original $475 through late fees, interest and collection/attorney fees. You are now more than 2 months late on the last payment. Is there any reason you haven't gone ahead and paid the last payment and the $475 since you claim you aren't disputing that now although it was what you were originally disputing?

I'm not two months late on the last payment. I paid the last payment but not the $475.60 since I wrote the office in dispute and for clarification, and sent certified w/RRR. But they ignored me. They're still ignoring me regarding that letter. Only on 9/20 did I receive a response on my 9/14 e-mail and was only then notified of the total balance still due, and that it isn't $475.60 but $3,700.
 
Last edited:
Too late to resolve this easily.

It's going to end up in court.

To avoid that, your remedy is to file a chapter 7 BK if you qualify.

Meanwhile your FICO is being destroyed.
 
Back
Top