Question: I feel I’m being scammed by a large bank. I’m 52, and have had many loans, I’ve always paid off my loans early, and didn’t like the tone of being threatened I might be turned into the collection agency. My FICO score is something like 740, so I’m no deadbeat. Guess I hold too many CC’s, otherwise my score would be higher.
I got a student loan back in Jan. of this year. The first payment was due April 1, 2005. So, at the end of Feb, I tore the payment stub for April out, and mailed in payment plus $15 extra for principle only. In March, I mailed Aprils payment with payment stub for May, plus an extra $15 for principle only. In April I tore Junes payment out, plus an extra $15. In May, I tore out Julys payment stub plus an extra $15. In June, I didn’t mail any payment, and July was already paid for.
Today, I get a letter from the bank telling me I’m overdue and behind because they didn’t receive Julys payment. What the heck, I paid it back on May 27th. I call them and this is the response I get. I owe them for July ($84 + late charge). They said the payment I made back in Feb, they applied it towards principle only. I asked them why would they apply towards principle, when in fact I mailed them Aprils coupon out of the book. They told me I’m not allowed to pay in advance more than one month.
Ok, now before I fire off a copy of my loan paper along with my cancelled checks to the States Attorney General, I would like to know what the general consensus for something like this is.
Here’s some language in my papers:
Terms of Repayment: I will make consecutive monthly payments of principal and interest on the due dates shown on my monthly statement or in my coupon book until all disbursements are made and I have paid all the principal and interest and other charges I may owe under the terms of this Promissory Note.
Right to Prepay: I have the right to prepay all or any part of the outstanding Total Loan Amount of this Promissory Note at any time without penalty. Prepayment of less than all of the outstanding balance of this Promissory Note will not reduce the amount of my monthly payments or postpone the due date of monthly payments, but will reduce the number of payments I must make. In any event, I will not be entitled to a refund of any part of the interest or finance charge already paid.
Answer: The terms you quoted spell it out quite clearly… “Prepayment of less than all of the outstanding balance of this Promissory Note will not reduce the amount of my monthly payments or postpone the due date of monthly payments, but will reduce the number of payments I must make. In any event, I will not be entitled to a refund of any part of the interest or finance charge already paid.” That’s how things usually work. The only time I’ve been able to prepay is for things like auto and homeowner’s insurance. If I make 3 mortgage payments this month then I will still owe a mortgage payment next month. In the past, I once made 2 loan payments in the same month by accident and I still owed for the next month. Like someone else said, the best you can hope for is that you explain the situation and they waive the late fees.
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