What to do about an unfair auto loan buyout?

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What to do about an unfair auto loan buyout?

My fiancé had her mom sign a loan for a truck through an auto financing company. The truck was purchased 6-4-04and  financed for $20,147 for 72 months @ 9.49% with payments of $360. In January of this year she was so excited when they told her she owed about $1,300 to pay off her truck loan. She was a month behind so she sent 2 payments in January which made us feel that she might only owe around $700 – 800 to pay off her truck. Then she received a call from the finance company the first week in February and they proceed to tell her that the truck note came fully due in January. This was the first time she had ever been informed and or told that her loan would be in default if it wasn’t fully paid off in January. Now they are claiming and telling her the new buy out is $2700; they have added more penalty and fees. If they are not paid in full they will have her truck repossessed. I am writing looking for some type of legal advice and guidance because I feel this is so wrong and boarder line criminal for a large well known bank to treat a 7 year old paying high interest customer with this kind of harsh and unfair action. I believe the consumer must have some legal rights and not be able to be overpowered by these big financial money hungry institutions. Can you advise and help us keep her truck?

Asked on February 9, 2011 under General Practice, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You need to review the loan agreement very carefully. It may be that the lender had done nothing wrong. The agreement is a contact; it binds both sides. If the lender has violated its terms, that could give rise to a cause of action (grounds to sue). The problem is, if your mother violated its terms, then the lender would be in the right. Specifically, you say that you mother was a month behind: you need to check what the agreement says about being behind in payments: does that give the lender the right to accelerate the loan or call it alll due at once? Also, you need to check what penalties and fees are allowed to be assessed, under what circumstances.

Also, when a number is provided to pay off a loan, that number is usually based on the assumption that payments are up to date; if your mother was behind and did not fully catch up in addition to making the extra payments to pay off the loan (which it seems she did not, since she anticipated still owing more money), that would often not satisfy the pay off conditions.

In short: both parties can enforce the loan agreement terms. Your mother and you should go throug the agreement, line by line, objectively, and see what happens if she was behind on loans, then compare that to what the lender did. If they violated the agreement, then she may have recourse. Good luck.


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