Protecting the Rights of Consumers For Over 25 Years

Question: Can they make you extend out you loan after you’ve paid all 72 (6 years) of payments? My husband and I bought a vehicle in 2008. We financed for 6 years and we’ve made 61 payments. We have 11 payments left as our maturity date is September 2014. We think we owe them approximately $6,300 but they say we owe $13,900 due to it being a simple interest loan and us deferring some payments and being late. Is this legal? They’re telling me were going to have to extend our loan out 12 to 14 months to get this paid in order to get our title. They sent me our payment history the other day and for 13 months in a row the payments we made went entirely to interest, with not one penny to the principal. The balance stayed at $19,300 for a year and 1 month.

Answer: It may well be legal, although a definitive answer requires analysis of the account history (calculating the interest for each period and seeing if the payments were properly applied). Persistent late payments or deferring a payment on an interest-bearing note can have exactly this effect. People think that the only consequence is the late charge, but this is not the case.