Auto loan error in bank's favor.
October 18, 2010 8:42 AM Subscribe
My wife and I bought a car five years ago and signed a contract for a five-year loan that should be paid off this month. However, the bank erroneously set up a a six-year loan and we were initially too careless/naive to realize our monthly payment was lower than it should be (and later it was "just the amount we always paid"). Are we stuck?
My wife and I signed up for a five-year auto loan in Nov. 2005. We were given a "coupon book", which looks like a deposit book but contains the monthly bills . This month was supposed to be our last payment and was our last "coupon", so my wife called Suntrust to make sure everything was okay, and that there wouldn't be a final hanging balance, etc.
Suntrust told my wife that we had another year to pay and they would be mailing another coupon book shortly. She thought this was wrong and dug out our contract which states clearly that we have a 60-month, five-year loan.
Here's the rub: we've been paying $335 ($334.10 is the amount on the coupon book) a month, which would be correct for a 72 month loan, but our contract says 60 months at $402.25 a month. I really don't want to pay the total extra interest and put off buying a my truck for another year, but we also haven't been paying the correct amount for a five-year. I do not remember any initial confusion regarding this discrepancy, but it was five years ago and we probably assumed the amount was correct as we have five years of invoices for $334.10. I realize now the coupon books are probably just in five-year increments and this isn't a case of trickery but of mutual error.
Is there anything I can do, or should do?
My wife and I signed up for a five-year auto loan in Nov. 2005. We were given a "coupon book", which looks like a deposit book but contains the monthly bills . This month was supposed to be our last payment and was our last "coupon", so my wife called Suntrust to make sure everything was okay, and that there wouldn't be a final hanging balance, etc.
Suntrust told my wife that we had another year to pay and they would be mailing another coupon book shortly. She thought this was wrong and dug out our contract which states clearly that we have a 60-month, five-year loan.
Here's the rub: we've been paying $335 ($334.10 is the amount on the coupon book) a month, which would be correct for a 72 month loan, but our contract says 60 months at $402.25 a month. I really don't want to pay the total extra interest and put off buying a my truck for another year, but we also haven't been paying the correct amount for a five-year. I do not remember any initial confusion regarding this discrepancy, but it was five years ago and we probably assumed the amount was correct as we have five years of invoices for $334.10. I realize now the coupon books are probably just in five-year increments and this isn't a case of trickery but of mutual error.
Is there anything I can do, or should do?
Unless there is something weird about your loan, you can always pay more than the minimum payment. You could just pay off the rest of your loan now.
posted by Polychrome at 8:48 AM on October 18, 2010
posted by Polychrome at 8:48 AM on October 18, 2010
If my math is correct (never a sure thing, but I think it's right), you're actually saving $80 interest -- $335.10*72=$24055.20, while $402.25*60=$24135. So I sympathize with you on expecting the loan to be paid off by now, but it sounds like at least you won't have gotten stuck paying extra interest.
posted by katemonster at 8:50 AM on October 18, 2010
posted by katemonster at 8:50 AM on October 18, 2010
$335.10*72=$24055.20
Actually, $335.10*72=$24127.20.
posted by jon1270 at 8:55 AM on October 18, 2010
Actually, $335.10*72=$24127.20.
posted by jon1270 at 8:55 AM on October 18, 2010
Actually, $335.10*72=$24127.20.
Yeah although the payment was 334.10 not 335.10, so he got the right number for the result but showed the wrong calculation.
posted by RustyBrooks at 9:03 AM on October 18, 2010
Yeah although the payment was 334.10 not 335.10, so he got the right number for the result but showed the wrong calculation.
posted by RustyBrooks at 9:03 AM on October 18, 2010
As katemonster said you're actually paying slightly less overall with the accidental 6-year plan. So the bottom line is that you've only paid around $20,000 of the around $24,000 that you were scheduled to pay in the original contract. I'm not a lawyer but I don't think trying to enforce the original contract is going to do much, because you broke it as well by not paying the higher correct amount the whole time. It's unfortunate that you thought you had it paid off when you still owe around $4000, but really there's not a lot you can do about it at this point and you're going to have to pay off the remaining principal one way or another.
posted by burnmp3s at 9:06 AM on October 18, 2010 [1 favorite]
posted by burnmp3s at 9:06 AM on October 18, 2010 [1 favorite]
Response by poster: We'll probably just pay off the remaining balance with a chunk from the money saved for my truck. My wife was upset and felt guilty that I would have to wait, but I told her it probably was for the best; money was a lot tighter that first year and I'm not sure we could have afforded the higher payments.
Nothing negative can come of this right, if the bank is assuming a 6-year loan (I'm guessing the dealership messed up the paperwork)?
posted by JeremiahBritt at 9:06 AM on October 18, 2010
Nothing negative can come of this right, if the bank is assuming a 6-year loan (I'm guessing the dealership messed up the paperwork)?
posted by JeremiahBritt at 9:06 AM on October 18, 2010
Response by poster: What I mean is, I'm not going to take a sudden hit for late payments now that my wife mentioned it to them on the phone?
posted by JeremiahBritt at 9:08 AM on October 18, 2010
posted by JeremiahBritt at 9:08 AM on October 18, 2010
If they haven't hit you with late fees at this point, it's a good bet that there's nothing that's going to go wrong if you just pay the remaining balance now. After all, you've been paying what's written on the coupons they sent you, which strongly suggests that you've been giving them what they expect, and are therefore not in default or arrears.
I share the suspicion that the dealership just submitted a 6-year loan instead of a 5-year accidentally, and all's well that ends well.
posted by Citrus at 9:19 AM on October 18, 2010
I share the suspicion that the dealership just submitted a 6-year loan instead of a 5-year accidentally, and all's well that ends well.
posted by Citrus at 9:19 AM on October 18, 2010
What I mean is, I'm not going to take a sudden hit for late payments now that my wife mentioned it to them on the phone?
Depends on the company. I would guess not. If they try, and you think it's worthwhile, consult a lawyer with some experience in contract law.
posted by smorange at 10:13 AM on October 18, 2010
Depends on the company. I would guess not. If they try, and you think it's worthwhile, consult a lawyer with some experience in contract law.
posted by smorange at 10:13 AM on October 18, 2010
"A requirement for the formation of a valid and enforceable contract is that the parties must agree to the same thing.If there is a mutual mistake of fact regarding one of the critical elements of a contract, there has been no meeting of the minds and the contract may be set aside."
Consensus Ad Idem.
Though perhaps at this late stage the bank could reasonably make the argument that you should have noticed and contacted them earlier. However, as you have a contract for a five year loan, which (similarly) they should have checked, I'd say you at least have good grounds for them waving any early repayment fees should such a thing exist, and if indeed you are disadvantaged by paying more interest over a six year loan (as I expect you will be despite the figures quoted above... longer loans always attract more interest) then you could also argue that their mistake has financially disadvantaged you and they should take measures to put you financially in the position that you would be had you been on a five year loan.
posted by Biru at 11:52 AM on October 18, 2010
Consensus Ad Idem.
Though perhaps at this late stage the bank could reasonably make the argument that you should have noticed and contacted them earlier. However, as you have a contract for a five year loan, which (similarly) they should have checked, I'd say you at least have good grounds for them waving any early repayment fees should such a thing exist, and if indeed you are disadvantaged by paying more interest over a six year loan (as I expect you will be despite the figures quoted above... longer loans always attract more interest) then you could also argue that their mistake has financially disadvantaged you and they should take measures to put you financially in the position that you would be had you been on a five year loan.
posted by Biru at 11:52 AM on October 18, 2010
So far, you have come out on the best side of a stuff-up by a financial institution - not very common, so congratulations!! By that I mean you have a written contract for a five year loan, and are paying interest calculated on the five year loan, but paying the loan off over six years. Right?
Potential problem is that you have an implied contract for a six year loan, based on five years repayments at a six year rate, difference being you are not paying the interest on a six year loan. My money would be on them making an attempt to have you pay the interest owing, that being a pretty much reflexive thing for a loan company. Don't lose that original contract, it is probably the only thing you have going for you, with your stamped coupon book.
I would (if you are going to pay out the balance) do so with a carefully crafted letter calling up the original contract, pointing out the error in the coupon book payment, and that the loan company did not notifty you of the shortfall in your monthly payment. Having now become aware of the error in the coupon book, you are taking the initiative in making a single catch-up payment, which is the final payment required to make the payments due under the contract.
Good luck.
posted by GeeEmm at 4:49 PM on October 18, 2010
Potential problem is that you have an implied contract for a six year loan, based on five years repayments at a six year rate, difference being you are not paying the interest on a six year loan. My money would be on them making an attempt to have you pay the interest owing, that being a pretty much reflexive thing for a loan company. Don't lose that original contract, it is probably the only thing you have going for you, with your stamped coupon book.
I would (if you are going to pay out the balance) do so with a carefully crafted letter calling up the original contract, pointing out the error in the coupon book payment, and that the loan company did not notifty you of the shortfall in your monthly payment. Having now become aware of the error in the coupon book, you are taking the initiative in making a single catch-up payment, which is the final payment required to make the payments due under the contract.
Good luck.
posted by GeeEmm at 4:49 PM on October 18, 2010
Best answer: I actually don't recommend doing it the way GeeEmm suggests. To put it simply: whatever the bank has on their computers regarding your loan is reality to them. So, I recommend this two-step process:
1. Call the bank, tell them that you want to pay off the balance of the loan, and ask how much that would be. Generally, the number that they give you is good for five days.
2. Pay that amount within the time that they give you. Once you're zeroed out, they should send you a letter of lien release, or some other documentation that says that you're paid off.
If you alert the bank to some irregularity, they'll have to investigate it. If that happens, then in the best case scenario, you'll have to wait until they're done with that to proceed. In the worst case, they'll give you a hard time about something, and you'll have to fight. Either way, it's just easiest to write a check and wash your hands of the whole thing.
posted by Citrus at 7:24 AM on October 20, 2010
1. Call the bank, tell them that you want to pay off the balance of the loan, and ask how much that would be. Generally, the number that they give you is good for five days.
2. Pay that amount within the time that they give you. Once you're zeroed out, they should send you a letter of lien release, or some other documentation that says that you're paid off.
If you alert the bank to some irregularity, they'll have to investigate it. If that happens, then in the best case scenario, you'll have to wait until they're done with that to proceed. In the worst case, they'll give you a hard time about something, and you'll have to fight. Either way, it's just easiest to write a check and wash your hands of the whole thing.
posted by Citrus at 7:24 AM on October 20, 2010
Response by poster: Everything worked out fine. Thanks again.
posted by JeremiahBritt at 12:13 PM on November 17, 2010
posted by JeremiahBritt at 12:13 PM on November 17, 2010
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posted by thirteenkiller at 8:47 AM on October 18, 2010