Is it legal for a car loan lender to make us pay double the amount for our car?

UPDATED: Oct 16, 2011

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Is it legal for a car loan lender to make us pay double the amount for our car?

We bought our car through one lender and they gave it to another. We started out with 72 months. As of now we find out we have a 96 month loan of $202 per month. We cannot trade this car in, nor refinance this car, nor sell this car. We still have a payoff of over $8,800. This car now needs over $,1000 work on it. The car is 7 years old; we bought it 4 years ago. Payoff is in another 4 years. The original amount was $10,000. What can we do about this?

Asked on October 16, 2011 under Bankruptcy Law, Washington


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

There are two very different issues here:

1) Can you end up paying far more than a car's list or base price when you finance it, due to fees and interest? Absolutely, the same way that if you buy your home with a mortgage, rather than cash, you will over the lifetime of the loan pay far more than the house ostensibly cost.

2) Can they change the terms of the loan on you, such as by increasing the length of the loan or the interest rate? No--not without your agreement. A loan is essentially a contract; its terms cannot be changed without the consent of all parties, even if the loan is sold or transferred to another. You are entitled to enforce the original terms of your loan, unless and only to the extent that you either explicitly agreed to change them, or implicitly allowed or caused them to change (e.g. if you didn't make minimum payments, that could have add to the time to pay off or increased the interest rate; if you agreed to a variable or adjustable rate loan, the rate changes over time). Pull out your original loan or financing agreements and see what you agreed to.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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