06TLASM

Last year I took out an auto loan of $32,900.49 with APR of 4.99% for 60 months to buy my '06 TL. My Credit Union had calculated my monthly payment (also written on the contract) to be $465.11 and gave me 60 payment coupons to be accompanied with the check each month. But I just realized that this monthly payment amount is substantially smaller than what I should have been paying ($620.72/mo based on www.bankrate.com). Does this mean that my legal obligation is to only pay the total amount of loan based on the coupons or the supposed amount of 32,900.49 + 4.99% ? What's your opinion?

Porkipine

iTrader: (1)

the way loan interst is calculated is not trivial. if u got a ~33k loan at 4.99% total amount paid is not 33k + 4.99%. Lemme do some calculations and get back to u.

Presto

Yeah they financed you for a $27,906.60 with 0% interest, very odd, if I were you I would just pay the 465 but stash the extra 160 away each month and see what happens at the end of 60 months, either way your covered and may end up getting the best deal on a 06 TL ever!

What is this monopoly? Bank error in your favor, collect $10,000!

Porkipine

iTrader: (1)

I don't know if you want to contact ur credit union. According to my calculations, $465.11 * 60 = $27906.6 which is almost $5000 less than the loan you got of $32.9k.
Using the monthly payment formula I have, $620.72/month calculated by bankrate is correct.

Porkipine

iTrader: (1)

since he signed the contract already, they have no right to change it unless its in their fine print. So wouldn't it be ok if he talk to the credit union to make sure that there's no extra payment or stuff in the end? It wouldn't hurt right?

george3761

Don't call. Just make your payments and stash away what should maybe be the difference as Presto said. If they catch it during an audit you then you can start making the correct payment. As far as them collecting on the past balance consult an attorney to see if they legally can. You don't want them messing with your credit history.

Also look over your contract to make sure there is no balloon payment due at some point.

drdug27

make payments and stash...they will find the mistake

lusid

Balloon pmts are typically at the end of the term.

If you wasnt sure of what to look for.

BLACKURA_NY

iTrader: (6)

well, you wanna hear a funny story.

i took out a loan of about the same, $32 ~33k. put down 7g's

4 weeks later... no bill....
8 weeks later ... no bill..
1o weeks later.. a TITLE , free and clear with NO LIENS

i could have screwed them big time, and just taken off with the car. but i was honest. plus they caught on and sent me a letter asking for the title of the car so they can adjust it with a lien. i

i got 4.9 apr, 33k loan, 60 months... 555.53 a month. bank is AHFC

BLACKURA_NY

iTrader: (6)

and five months into the loan, when the realized they werent billing me, they hit me with $2700 bill!!! LOL.

its all good though, im an honest person and i dont want my credit getting wrecked.

darksom1

Pay the amount of the contract as shown. That is your SOLE obligation! Even if they find that they screwed up, they would need to redo the contract. Which means they need you to cooperate, but you don't have to! Legally! But don't be too happy just yet...

In every loan, because of potential issues on your part or their's, they have the right to "call" the loan without any prior notice for any reason they see fit. This means that if they ask you to redo the contract to incorporate the right terms into the new agreement, then they need you to agree to sign off on it. You can say no, but they can say that $27,906.6 is due and payable right now! If you have that kind of money laying around, or if you have resources willing to lend it to you...then hold your ground. I know it seems like it is impossible odds, but you have a LEGALLY BINDING CONTRACT! Just like you can't go back later and renege on those terms, or say you don't agree with them...neither can they. But they can ask for ALL of the money now at any time during the agreement terms. Maybe they will, maybe they won't, but you DON'T have to do a new contract.

So yeah, actually, you are 100% safe from any harm - as long as you have $27, 906.6 waiting at your disposal - just in case. If you don't, and you say no, then they can possibly call their loan and leave you scrambling to buy a car with someone else. BTW, as long as they don't call the loan for DELINQUENCY or DEFAULT on your part, then they can't touch your credit!

I would also like to add that I know all of this from personal experience!

LKLD

Well, only if stated in the contract. I doubt that that is in there unless you have bad credit,in which case they will have every possible clause included. Sad, but good credit does have advantages.

darksom1

Just in case I missed it...this is hypothetical also...

If the amount of the loan on the contract reads $34,000, it doesn't matter if they screwed up on the math. You still owe them $34,000. So in that case, you should put the rest of the payment to the side for when they come a'calling for it! Because once they do their audit...they most assuredly will!

darksom1

If you have a loan or financing, your loan says it too. It has nothing to do with credit. It is about logistics. I'm not talking about default when I say call. I am talking about their right that they extend themselves. It has nothing to do with credit,a nd everything to do with logistical errors. Go look at your contract and see what I mean. Honda has it in their contract as well as any other finance office.

darksom1

Ok, I just looked over a standard Honda Contract, and I was half right on this one.

I was right that it isn't in the contract because of bad credit, because my credit is really nice, but it is in the contract in case you go into default!

So my original statement that they can't do anything is correct, provided that we aren't just talking about math, as I said in my second post. They can't call the loan as long as you don't go into default. So just make your payments on time!

BTW, if you hold them to that payment schedule, expect one hell of a balloon payment at the end! LOL!

jay0k

The bank always reserves the right to correct errors. They will figure it out and you you will owe the money. I would contact them immediately to get it figured out. It could go all the way to 60 months and you will find yourself financing another $5k.

This legally binding contract stuff you're hearing won't work in this case. You were financed for the full amount and that is what you owe, just because someone made a mistake with your automatic debit doesn't mean you still don't owe the full amount.

LKLD

Honda contract? Believe me...contracts are based on scores. Based on credit scores, we could have 2 different contracts and buying the same vehicle.

What I'm saying is this...... good credit (720 or up) will usually not have a contract that has language, that has stipulations that can cause problems later . I have been at both ends in my lifetime and can tell you that "contracts" are different for different people.

That said....I wish you well.

SteveP66

Somewhere on the contract it should list

Total Amount Financed
Finance Charge in dollars
Finance Rate %
Term
Montly Payment

What is listed under Amount Financed?

darksom1

Actually, that is what was stated. If the math was wrong, the amount still is enforced in the contract! You still owe the amount no matter how it's computed into payments.

Instead of debating it, why not look at your "exclusive" contract, old or new? It has nothing to do with credit, whether you agree or not. Other factors do, but not this particular thing. Look at your contract and stop guessing. My personal credit score is above the mark you said anyway. I have never been 30 days late on anything since I was 20 years old and I have lived twice that long! That stipulation to recall a contract is in everyone's contract, including the contract for my daughter's Mazda! You honestly think someone would lend you money with NO provision for default because you have "good credit"? That makes no sense, and is definitely bad business sense! The "language" you should be looking for is under default. It doesn't have to SAY what I typed verbatim, but it will MEAN what I said, no doubt about that. If not, give me the info for your bank, because I want a loan with someone that just hands them out for good behavior! LOL!

06TLASM

Thanks for everyone's opinion thus far. My other concern is that if they, purposely or not, gave me an incorrect figure for monthly payment that is underestimated. This means that I have been paying negative amortization, and the unnecessary interest has been accumulated so far. And if so, do I have legally means to have them correct all those charges ? Now, on my contract, it does spell out my finance amount of $32,900.46 as well as monthly payment of $465.11. Also, could I treat this as fraud because I can claim that the financing gave me a false impression that I was able to afford the monthly payment of $465.11 instead of $620.72 ? What do guys think?

pandaman1784

you claiming fraud can only end negatively for you. assume that you do claim fraud. then the most likely course of action by the credit union is to give you back all the money you have paid them so far and take the car back. this way, it will essentially reset everything back to the way it was before the loan. you don't have to worry about your credit score taking a hit because you no longer have any outstanding debt. they will eat the amount the car has depreciated, but in terms of the company, it's a small loss. the impact on you might be a slightly greater. firstly, you'll be out of a car. secondly, there's a chance this could have ended in your favor if you didn't claim fraud. and lastly, the credit union might decide to not do business with you in the future. so i would suggest that you make the specified payments, but save some money off so you can pay the extra if they ever ask you for it.

6spMike

There's only 2 choices: call or not call. One's honest, one isn't.

INSPIRE 32V

iTrader: (1)

x2

SuperStar

If they want to sue him they can. I wouldnt ignore this.

SuperStar

It's a good thing you're not a lawyer.

leedogg

I think the mistake and confusion is that you got the interest rate and duration of an 84 month (7 year) loan but its listed as a 60 month (5 year) loan...

Just tell them to keep the interest rate and payments and make it a 7 year loan. My payments are 470 something for 7 years, I pay off 500/month. If I so desire I can increase the payments at any point, but their interest is 4.x and I have my money sitting in a savings account with 5.x interest...

your_mom

What leedogg said. I thought it might be a 72 month loan and was about to post, but the math didn't work. I had no idea they had 84 month loans! That's insane.

leedogg

Basically its a lease price without lease restrictions I think only credit unions offer it...

06TLASM

But even though they give me a figure of monthly payment calculated for 84 months instead of 60 months, the contract says 60 months, and based on this, I am paying negative amortization. This means they are charging me all these extra unnecessary interests that should not have happened in the beginnning. So the question boils down to: LEGALLY, I'm only responsible for the amount of $465.11x60=$27,906.06 which is based on their calculated monthly payment for me, or actual loan amount $32,900.46 + 4.99% compounded ?

KJSmitty

I can't believe this is still being questioned...

OK math wizard, you borrowed $32,900. You WILL pay that amount back plus compounded interest at 4.99% APR for whatever duration you end up borrowing etc... No ifs, ands, or buts.. Any simple loan calculator would have hinted to what your monthly payment would/should be. You playing ignorant and the bank making a mistake leaves you with nothing more than what you already mentioned: you are compounding more interest due to paying less on the principle than if paying the actual ~$630 a month. In the short term the interest difference is minimal (~ $8 a month...), long term it would obviously add up.

The bank owes you nothing more than a "corrected contract" and an adjusted payment schedule. Like others have mentioned, contract or not banks are near always "contractually protected" against "errors". Sure you could sock away the $160/month... But at the end of 60 months your "unexpected balloon payment" will be more than the $9600 ($160x60) you have put away..... Now, if you were making a solid 5% return or better on that monthly stash, you're golden...

Big picture - (like others have mentioned) You signed a contract stating you were borrowing $32,900. Bank mistake, 60 month or 84 month, you WILL pay all of that back at the "agreed" upon interest rate of 4.99% APR. Fight or play games with the bank all you want, your credit score, TL title and wallet will be the only thing that suffers.

Go to the bank, get it fixed, and learn from it..

Tip of the day: One should never buy a car and/or dive into a finance contract without already having a darn good idea of what the payment will be - given current finance rates and loan durations.....

- You're lucky they dealership finance idiot didn't rape you blind.

fastlarry

I agree with KJSmitty's analysis and advice. Get to the bank now and get this fixed. You owe them the full amount plus interest. Any payments made up to now will first pay the monthly interest due, then the balance of the payment will go toward the principal, which will mean that you will owe a very large balance at the end of 6o months. While the bank did make a mistake, the fact that you know that they made a mistake and you are knowingly perpetuating that mistake in contradiction to the terms of the agreed loan could be percieved as a fraudulant act. You have nothing to gain and a lot to loose by not bringing this mistake to the attention of the bank.

ndabunka

This does sound like a lease payment. Are you CERTAIN you are BUYING the car or is it possibly a lease? Some dealers will switch you into a lease while you are trying to determine what kind of a payment will work. Some buyers don't even realize they are in a lease until, WHAM to late (like now). So, if it does say 60 months and at that rate, it's GOT to be a lease. If not, then the contract should still hold up but you WILL owe a "balloon" payment at the end (of something like $5K so just make certain you are ready for it at that point and can pay that amount out of your savings or something. So, IMHO you should call them and ask "what's going on?" or simply continue on the same path making the same payments and putting the difference you OWE them into a separate checking/saving account so that it will be there when you need it.

ChuckDu

If you want proof of this, call the lender and simply ask for a payoff balance. The principle you owe will be $32,900 minus the principle you have paid to date (plus a little bit of interest you haven't paid since your last payment.)

Ummm, and there's no negative amortization involved here. Negative amortization occurs when the principle you owe grows because your payments aren't large enough to cover the interest payments. Based on the story you've told, you're principle balance is dropping, albeit slower than your original loan terms calls for (84 months vice 60 months.)

hoagm

Call the bank, get it fixed. The amount you're NOT paying is gathring interest as KJSmitty said. Best case, they change it to an 84 month contract and you're back to business as usual. Worse case, you'll owe them $620/mo plus any additional interest you've accumulated in one bulk payment RIGHT NOW.

KJSmitty

After reading my post above this morning, I came across as being an A-hole. That was not my intention.

Like others have mentioned, you truly need to get with the bank and get informed as to the exact "type" of loan you have. Whether it is a mistake or more likely some "smoke-and-mirrors" contract that the dealership whipped up to get you at a payment you could afford,, you need to fully have a grip on it.

I have been around for near twice as long as most on this board and have learned many of the same lessons along the way. When it comes to cars however, I had the advantage of working at a large dealership from a young age on, for over 8 yrs. I can honestly and easily tell all that car dealerships operate at the very raged edge of "fraudulent" business activities - in every aspect of their money making operations. You must always walk in to a dealership completely prepared to be taken advantage of - and have as much background info (pricing, options, interest rates, financing terms etc, etc,) prior to remotely sitting down and "negotiating" a deal.

If you walk in and say: "I want that TL-S but I can only pay $460 a month... By God they will make that happen yet you will have a loan you will live to regret. Most don't even realize it until they go to trade-in and/or sell.. Then they are informed that the car they have been paying on for 3-4 years still has a loan balance near the original cost of the vehicle.. Happens all the time.

Hopefully this did not happen to you.

Good luck

Jrezo

Agree, something is off. Did you also put a down payment?


Banks dont mess up in your favor, its always theirs

leedogg

i'm telling you, all you need to do is basically get it refinanced in such a way that your payments, and if you can swing it, total interest payment, will remain the same as before. If they need to drop the interest rate for an 84mo loan, so be it. They fucked up, and you going to them about their fuckup (find out if its a fuckup first) should give you the necessary leverage.

camporealer

Here's my

You definitely got an 84 month loan at 4.99%. This is not necessarily a bad thing. The required monthly payments are low, and you have the option to pay more. If you pay $620/month for a few months, you could get ahead and then possibly skip a payment or pay the minimum in any month that money got tight. In any case, if the contract says amount financed is $32,900, that is what you will have to pay back.

Having a long term loan at 4.99% interest doesn't really hurt you, since you can earn almost that much in an on-line savings account.

Two things to consider:

1) You may not want to keep the car for 7 years so it might be a good idea to pay it off early.

2) I hope you have gap insurance. If your car is totaled, you will be liable for the difference between what the insurance company pays and the balance left on the loan. With such a long loan term, this could easily be many thousands of $.

KJSmitty

Even if the bank-paperwork is FU'ed, there is no contractual "leverage".
He can only hope to get them to finance in a manner that fits the budget. I guess you could say the leverage he does have is possession of the car... Of course, if his credit stinks and his debt ratio doesn't allow a payment reflecting the loan they can give him,,,,, the bank could just say you bit off more than you can chew - hand over the car.... I doubt they would however, due to that being a near instant loss of green for them...

Only time will tell... Best would be if they just re-printed the contract stating 84 months vs 60... Then just do as Camporealer mentioned above....

Will be interesting to hear: "the rest of the story"..

leedogg

Well, I wasnt really thinking of a legal leverage, as much as a "customer found out his credit union fucked up and is now pissed off unless they fix it" leverage. I'd say its more effective if he goes to them instead of them finding it and going to him.