Legal Question in Civil Litigation in California
Auto Loan Breach of Contract
My wife and I nearly three years ago bought a vehicle from a dealership, which steered us to a financing package from a company. We asked and were assured that there was no prepayment penalty and we could save if we prepaid our loan. We did that and should have been done after 26 months. I contacted the loan company and presented them all the supporting documentation proving our prepayment saves $1,700 in interest and should be paid off. By now I have had numerous faxes back and forth in which I discussed that there is no prepayment penalty according to the contract and they are in breach of contract and misrepresentation. The company's representative insisted that this loan had its interest added to the principal at the beginning i.e. precomputed. To this I stated then why is their prepayment verbage in the contract and why is their an APR rate at the beginning of the contract. If you make us make all these payments, then your APR is not 13% but closer to 21%, which is not on the contract. Any suggestions?
2 Answers from Attorneys
Financing Fraud
You may have a good fraud claim, although it isn't entirely clear from your description exactly what the written agreement says and what you were told verbally. You should have a lawyer review your papers. Feel free to contact me if you like.
Problem with bad Loan
I need more information to give you a good evaluation of yoursituation, however, on the surface, you may have a good claim of Loan fraud. If your written contractallows for no pre-payment penalty then the lender is introuble. Also, according to FederalBanking regulations, when you took out the loan a "REG Z"Disclosure statement MUST have been given to you and you signed it.
This REG Z tells you the total interest, your monthly paymentsand the interest rate onthe loan.
Finally, most finance companies DO charge all a majority of the interest in the first few years on any loan(it is called the rule of 78's), however, if you overpaid the monthly paymentor paid a lump sum, it should have been posted to paydown theprinciple. Have you asked for an account history print-out??
This will show every payment you made and how the money was posted. This paper will be very valuable if you need to file a litigation against the lender. Also be aware that that there is a one year statute of limitations. In otherwords, if you do not file a lawsuit within one year of the wrongdoing, you lose your ability to sue.
Where in California did this transaction occur???
If you have any further questions, please feel free to contact me.============================================================If applicable to this message: "This transmission does not create an attorney-client relationship. I will not be representing anyone without a written agreement signed by all parties. Answers to questions are for general information only and should not be construed as legal advice in any particular jurisdiction. If you need legal advice for a specific legal problem seek the services of a knowledgable attorney in your area or locale."=============================================================
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