Warning, making loan payments, count your pennies!

[Turbo Horseman]

I am severely displeased.

Received a statement from Chrysler Credit Canada today that says I have a payment to make that is substantially smaller than my usual monthly payment. So why is that? I have been paying a little extra each month to pay down the principal, and the reduced payment is about what the extra is that I have paid so far. So why am I getting this statement?

After being on hold for ever to CC, I find out that the extra I have been paying each month is not reducing my principal. Instead it is being put aside in an interest bearing account, benefitting DC I assume. All because I didn't tell them that I wanted the extra to go towards principal. Talk about ****** off. I'm not stupid, I know the industry practice, what the financing contract says and what I was told by my dealership and they don't jive with this ***** story about this not being how their system works. Haven't been this upset in a long time.

I find this to be unethical. They were making money off of me two ways without advising me. They breached their contract with me.

After putting me on hold for a few minutes, I was told that they would go back and credit my account as if I had told them originally that I wanted the extra to go to principal in the first place.

The clincher, in order to continue having the principal reduced, I have to tell them each time where I want the extra to go.

They rectified the breach, but they haven't repaired the damage to their integrity with me.

If I ever buy a DC product again, I will not use their financing. My experience: great truck, great dealership, miserly manufacturer (no high idle etc. ) and unethical finance company practice.

So everyone, call Chrysler Credit Canada or US and check your loan status. If you've been paying some extra each month, then get them to credit your account properly stop this unfair practice.

Let us know your experience and the outcome.

 

[KatDiesel]

<font color=blue>When you paid the "extra" did you just include it in the check with the "normal" amount?

Anytime you want to pay "extra" to reduce the principal on a loan do so with a seperate check and write in the "memo" section for Principal Use only. This way you have a legal document stating what you wanted done with the money.

If you just send one check with a "lil" extra in the amount then the "bank" is welcome to do whatever they wish with it.

So "technically" they did nuthing wrong. Doesn't sound right but thats the way it is.

 

[Turbo Horseman]

Kat it wasn't explained to me like that and it isn't written that way in the contract. What it says is that after all other required payments, any remainder will be credited towards the principal.

I disagree that they were "technically" right. No one else in my experience has run into this and no other institution does it this way. On all my personal loans, I make more than the minimum required payment and it is always credited to principal. That's just what my loan payment is, a monthly minimum, its in the contract, the sales speech and the industry practice.

By the written word, industry practice and fair dealing, they were wrong... I get grumpy just thinking about how others may be suffering the same treatment. Sorry, but you'll have to work harder to begin to convince me otherwise.

Appreciate your input, but I'm still steamin!!!

 

[Diesel Junkie]

It has been my experience that with any loan that you pay extra on you must inform the lender how you want it to be used each time.
I've had 4 morgages and have always had to direct any extra into principal if that was where I wanted it to be placed.
Whenever you take a loan this is a question you should clear up before you sign. Although I think you will still get the same answer from them all.
Good luck, Scott

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'01 3500 qc 5sp, 4x4 white w/ green graphics dark tint, flaps,K&N 0880 and pre filter, tonneau,painless, Uniden Grant LT w/3' glass K-40,aux. back up lights,
'91 Regal 260 at Dale Hollow

 

[Sled Puller]

One note, in my 16 years of bill paying, I have never lost a payment.
2 loans to Chrysler, and yep, you guessed it, they never arrive !!!
I blew the first one off 3 years ago, this time I was STEAMED!!!
3rd person on the phone got the late charge taken off. I accused them of making extra money on late fees by loosing payments. They were not amused.
First time I yelled on the phone, felt good!
hey DC your people are loosing **** in the mail room,I'm not paying for it.

 

[Turbo Horseman]

MGM,haven't had them lose a payment yet.

Scottaxline, I understand that requirement with a mortgage, they have very strict repayment provisions. Personal loans, which my truck loan is, are very flexible and only require a minimum monthly payment without there being a ceiling. They are structured, like a credit card so that any extra goes to paying down the principal. Rhetorical question: When was the last time you had to tell your credit card company what to do with the "over payment"?

Maybe it's different in Canada, or I've just been lucky, but I have never had to tell the lender what to do with the extra payments cause its written right into the contract what they are supposed to do with it. This contract is no different. The lender's attitude is different and does not speak well of the lender. I'm thinking its CC and not me cause all the folks at the local dealership, who I would give 5 stars, were amazed to find out that Chrysler Credit was doing this.

What it comes down to is that CC figures it can make money by "interpreting" a clear contractual term in the contract in their favor. Guess what, its their contract, with their wording, imposed upon us who borrow, and no court is going to go for their "interpretation" if there is a possibility of more than one interpretation.

What CC has done is unilaterally added a contract term after the contract was signed. Can't be done, but they seem to be trying to get away with it.

Really, its indefensible. An over payment is made, they don't "know" whats to be done with it, they don't ask, but they require instructions on what to do with it, but they don't ask. Then they put it into an interest bearing account so they can continue to make the same amount of interest off the borrower, and use the extra money paid by the borrower to earn interest for CC, at the expense of the borrower cause they didn't "know" what to do with it. That's shameful. (Sorry I'm holding back and not expressing myself. )

Again, check to make sure Chrysler Credit isn't costing you money.

 

[Keith Eilers]

About 1993, I had a similar problem with Toyota. When I bought the vehicle, they said that it was as "simple interest" loan and that I could pay off principal early. After about a few payments with extra $$, I learned that the extra was being appied to future payments and not to principal. The total $ paid at end of loan would not be lowered under this scheme. The solution, got a stock loan through my company plan and paid Toyota off. Hearing about similar schenanigans from DC enforces belief that it is better to get loans from credit unions, stock plans etc. than from manufacturers.

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Keith Eilers, 99, 2500, 5sp, LB, QC, 4wd

 

[rhoads]

I don't care if you are dealing with CC/d-c
or your internet supplier-we are dealing with people that can't deal with common sense unless we give them directions-there road map is not the same as our's. you have to draw the picture-then they can follow. Had the same proplem with internet supplier and a month later i had to draw the dim wit on the end of the line a picture-if i sent you (x) and your rate per mo is( y) credit me for (z). i don't care if my history has to pay by the year Back then you gave me a deal.
When the credit run's out, i will decide if i still like your service.
Don't bad mouth the dim wit at the other end ,they are the one that will set in your way of travel( tee intersection) when they have set there looking at your left turn flash ,(they intend to go right)and you set there waiting for them to get out of your way because you cant make the turn because they are in the way of your sweep... . Keep cool and don't take of the fender,even if you are so tempted... ... ... ... ... .

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96-3500 SLT EXT. CAB AM/FM/CD-RINO LINER. D-CELERATOR EXH. BRK-RED LINE VAC. OVER HYD BRK CONTROL- AIR BAGS W/HVY DUTY AIR COMP. PUTCO S/STEEL DEEPBOARDS FRONT TO REAR. REESE 20K 5TH WHEEL & GOOSE -REESE 20K HITCH BELOW W/17K RECEVER. CLEAR COATED & SOUND DEADINGING &UNDER COATED 5 SPD/W 4:10 MCHLN'S 235/16'S UNIDEN PC76/WEATHER-WILSON 1000 MAG MOUNT ANT. 4 WHL ANTI LOC BRK SYS.
750,000 miles

 

[Cooker]

I'd like to add my $. 02 here,

A credit card is under different terms than a personal/auto loan. A credit card is a floating line of credit with a credit limit. This is much like an "open" account home equity loan. Payment on these loans are treated differently because they are differnt legal contracts.

A personal/auto loan is a fixed contract from the start. You contract with the bank, CU, or CC to borrow some money from them for a fixed term, at a fixed interest rate, for a fixed payment. Believe it or not some personaly loans, not so much today (other than some leases are arranged this way), did not allow you to pay off the loan early. Regardless of how much extra you paid per month, all you were doing is paying down the fixed amount of the contract.

It has been my experience that with personal/auto fixed contract loans (including mortages), you must specify what you want done with the extra money sent in with the payment.

Turbo Horseman I can see how you are upset. Perhaps your contract does read differently than the "standard" fixed contract loan. You can't trust anybody at the dealer or associated with DC. I think they are almost all, dumb as rocks. Regardless of what was verbally stated, it is what's on paper that matters.

My fater is going though this exact same situation right now with the Honda financing corporation. Mailed a little extra because he was told that it would come off the principle, NOT. Then he was told to mail extra and make a memo on the check to pay the extra to principle, NOT. Now they are telling him to make out two checks, one for the payment amount and one for the extra principle. I haven't heard if that worked or not, but is is about ready to refinance then loan with a real financial institution, but even there he will have to specify in some way that he wants the extra to go to principle.

I agree that it is a bit misleading on their part, they are trying to maxamize their profit on the loan by unknowingly forcing you to pay the full, agreed upon, fixed amount of the contract, we just have to stay on our toes and keep ahead of them.

I hope you get things sorted out so you you don't have to send two checks like my fater. Good luuck.

Ryan

 

[John]

Originally posted by Turbo Horseman:
Kat it wasn't explained to me like that and it isn't written that way in the contract. What it says is that after all other required payments, any remainder will be credited towards the principal.

I disagree that they were "technically" right. No one else in my experience has run into this and no other institution does it this way. On all my personal loans, I make more than the minimum required payment and it is always credited to principal. That's just what my loan payment is, a monthly minimum, its in the contract, the sales speech and the industry practice.

By the written word, industry practice and fair dealing, they were wrong... I get grumpy just thinking about how others may be suffering the same treatment. Sorry, but you'll have to work harder to begin to convince me otherwise.

Appreciate your input, but I'm still steamin!!!

I concur!

Kat, there is no way in He!! I'm going to send two separate checks in each month to all my creditors that I pay additional principle to. #ad

 

[E7mack96]

My '99 was through Chrysler credit. My monthly coupons had a line item for Misc. in addition to the payment amount. I always wrote in "principal" and included the amount in one check. In six years of chrysler loans I have never - ever had a problem with this practice. I would also call and check balances once in a while too.

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2001 3500 QC 4X4 Cummins H. O. & 6 Speed, Powermax 2 and needing more power!!!!

 

[KatDiesel]

Originally posted by John:
Kat, there is no way in He!! I'm going to send two separate checks in each month to all my creditors that I pay additional principle to.

<font color=blue>
You don't have to do it for everything, just loans like autos and homes, thats the way it was explained to me in school. And the reason for the second check is so that it could be used as a legal document in court if needed, least thats my understanding.

Its one way to beat the interest.....

 

[Cooker]

KAT, You are right.

With a fixed contract loan it is most often necessary to pay the "extra principle" amount in a way that the creditor will know where the money is supposed to go. We should not assume they are going to apply the extra money in a way that will benefit us. They will obviously apply it in the way that will benefit them.

It may not be the most ethical way of going about it, but like I said before, we knowingly entered into a fixed contract with the creditor. Whatever statements that are written on the note that we signed with the creditor are the ones that will hold up should there be any legal action that must take place.

 

[WOWZY]

I had a friend who was wanting the opposite to happen. He had the idea that he would take his tax refund check and pay 6 months worth of payments so that he would have "partying" money for the whole summer. He paid the 6months worth in one lump sum and then 2 months later he got a 30-day late notice in the mail. He called the bank and they told him that they put the rest of the money toward the principle.

He told them to put the money towards the payments and not the principle. Confused, the bank did as he wished, but not before trying to talk him out of it.

He was "Young, Dumb and full of ... "