Auto lender refuses principal-only overpayment on simple interest loan
A borrower with a current simple-interest auto loan was refused a principal-only overpayment, which they argue violates the loan's no-prepayment-penalty terms. Single-instance servicing complaint.
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Similar Problems
surfaced semanticallyBanks Misapply Principal-Only Loan Payments Inflating Balance and Interest
Lenders like BMO Bank repeatedly fail to correctly apply designated principal-only payments to auto and RV loans, resulting in incorrect loan balances and increased total interest cost. Consumers making extra principal payments have no reliable way to verify correct application until significant errors accumulate. The servicer misapplication pattern benefits lenders through increased interest revenue at borrower expense.
Auto Loan Principal Not Reducing Despite Payments; Refund Not Credited
Credit Acceptance Corporation auto loan shows unexplained interest fluctuations with the principal balance failing to decrease despite regular payments. A VSC cancellation refund was also never credited to the account. The pattern suggests systematic payment misapplication.
Banks Apply Extra Loan Payments as Paid-Ahead Instead of Reducing Principal
When borrowers make additional payments designated as principal-only, banks automatically redirect them to a paid-ahead status that shifts future due dates rather than reducing the outstanding principal balance. This practice maximizes interest accrual for the lender while defeating the borrower's intent. The misapplication costs borrowers significant additional interest over the loan life without clear disclosure.
Auto loan balance reported higher than original amount financed despite payments
A borrower reviewing their transaction history found their auto loan's current reported balance exceeds the original amount financed despite numerous payments made, raising accounting concerns. Single-account dispute.
Auto Loan Balance Grows Despite Regular Payments Due to Accounting Errors
A borrower making consistent monthly payments sees their Credit Acceptance Corporation loan balance increasing rather than decreasing, with unexplained interest charges, late fees, and payment reversals. This suggests systematic payment misapplication or accounting fraud. Consumers have no visibility into how payments are being applied and no self-service remedy.
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