Can a car company demand money from mebecause I’m making my payments early?

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Can a car company demand money from mebecause I’m making my payments early?

My car payments are $173.23 every other week. I have sent them $200 every other week while asking that the remainder of $26.77 go toward my principle. They said that because my last payment was received by them before the due date, and because I said to put remainder on principle they put the whole $200 toward my principle because I did not specify the $26.77 go toward principle. So now they say I owe them $73. Who is in the right? Do I owe, or don’t I?

Asked on September 21, 2010 under General Practice, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Probably if you paid early, when a payment was not due, they are right--there's a good case that if no payment is due at that time, then the whole amount was a remainder to put against the principal. However, at the end of the day, as long as you are being credited for all the payments, you are not actually hurt by their asking for more towards the next payment--indeed, by prepaying some of the principal even earlier than usual, if anything, you shaved a tiny extra bit off what  you'll owe. Given that the cost of damage to your credit rating or the cost of defending against collections efforts both exceed $73--by a wide margin--the best thing would be to (1) make sure everything is being credited and accounted for, then (2) pay the additional amount.


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