Legal Question in Banking Law in California

I was wondering about a issue that popped up the other day with Wells Fargo Dealer Services. I wanted to know what a expert would think. I called yesterday because I have noticed for a while that everytime I make over payment on my loan. It is taken off the next months payment. Which in sense is not cutting that amount of the loan at all, but is a prepayment on future payments. Well I noticed this for about 6 months, I just got this loan in March 2010, and finally took up the task of trying to speak with a person. So yesterday when I called a woman answered and when I asked why I you keep putting payment towards future payments. She informed that I was doing very good on my loan and to keep doing what Im doing. At this point a red flag got waived. I said no I want all overages applied to my principal right away. She continually explained to me that it was no different than doing what I was doing. She also explained if I want to continue to have my overpayments applied to directly to principal I have to mail it in or call in after making the payment and tell them to apply it to principal. Now I am a numbers type person and I finally caught this. However I paid almost a year of overpayments with no effect on the interest of my loan. Besides that how many other people are being duped by this and dont even no about it. All we are doing by doing overpayments is pre-paying a future payment with no effect on the interest. And to have the girl from Wells Fargo Dealer Services continually swear its the same thing is a bold face lie. I tried to explain to her the difference and she still stuck to her guns and when I asked if there is anyway to have all future overpayments applied to principal. She continually said no only mailing it in or calling. Which of course is a hassle. I just feel that this kind of a scam. I remember getting the loan at the dealer ship and the loan officer clearly stating and all overpayment will be applied directly to principal so you wont have to pay the full interest. And now I have to deal with all this hassle. And all the overpayments I have made in the first year of my loanwas wasted. Being the first year is the most important time to take a cut out of interest. Its not a big deal, but I just think about all the other people who think they are paying off interest on their loan but are just giving Wells Fargo Dealer Services a future prepayment, And to have their operators asuredly say its the same thin is ridiculous. Honestly when she was trying to explain her rational I was slapping myself in the head. I was wondering what a professional thinks about this scam?


Asked on 3/18/11, 9:12 am

1 Answer from Attorneys

What is not clear from your question is when they are actually posting the extra dollars to your account and what internal accounts the entries post to (which is what really matters). There is no way to tell if what you have is a confusing policy as to how payments are reflected on statements, but no real issue in the bank's internal accounting for your payments (in which case the woman is right, it's all the same), or if the bank is taking your over-payments as an interest free loan from you, applying them later AND charging you interest on the money, which might be grounds for a significant class action lawsuit. If you would like a real evaluation of the situation, contact me by phone or email, and order an account payment history from the bank. I can then go over the banks entries, compare them to your statements, and let you know if you have a case worth pursuing.

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Answered on 3/18/11, 9:41 am


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