What is the name of your state (only U.S. law)? NJ
I purchased a car in July 2008; put 20% down and financed the rest for 5 years at 6.65%. I was talked into a warranty and GAP coverage, both of which came with a 30 day cancellation option, and I ended up using it for both, a total refund of $3250. I continued paying the original monthly payment anyway, which should have created an extra $64 in principal reduction every month for the past 3+ years. By my own calculation, I would have made my final payment in either January or February 2012. I was told recently that I owed nearly $1500 more than I thought I should right now, and won't be paid off until next summer (July/August 2012).
The only possible explanation I can come up with is that they accrued the entire 5 years worth of interest on the initial balance at the inception of the loan. Is that legal? I'll have to dig up my paperwork to see if that was mentioned anywhere, but I'm hoping someone can confirm that it's not possible before I do. I've had plenty of loans in my life and never had that happen before, so it never even occurred to me at the time that it was a possibility.
Thanks
I purchased a car in July 2008; put 20% down and financed the rest for 5 years at 6.65%. I was talked into a warranty and GAP coverage, both of which came with a 30 day cancellation option, and I ended up using it for both, a total refund of $3250. I continued paying the original monthly payment anyway, which should have created an extra $64 in principal reduction every month for the past 3+ years. By my own calculation, I would have made my final payment in either January or February 2012. I was told recently that I owed nearly $1500 more than I thought I should right now, and won't be paid off until next summer (July/August 2012).
The only possible explanation I can come up with is that they accrued the entire 5 years worth of interest on the initial balance at the inception of the loan. Is that legal? I'll have to dig up my paperwork to see if that was mentioned anywhere, but I'm hoping someone can confirm that it's not possible before I do. I've had plenty of loans in my life and never had that happen before, so it never even occurred to me at the time that it was a possibility.
Thanks