Loan Payment with additional Principle

[anatnarb]

What is the name of your state (only U.S. law)? TX
I have been paying off my Ford to Ford Motor Company, using my online bank payment service. I have regularly had the following added to my payments, "Apply excess payment to principle". The monthly payments are about $280, but I have paid $400 per month hoping to reduce my principle and pay it off even earlier. When I talk with Ford, they say this is not good enough, and they apply the excess payment as an early payment, not to principle. Thus, they show that I still owe significantly more than what I would have had they applied the excess to principle. I believe they should honor the request and re-calculate my pay-off to reflect the principle payments. Do I have any ground to stand on here?

 

[justalayman]

The problem you have is; how was Ford alerted that the additional was intended to be applied to a principal payment?

If your notation was not adequate to make Ford aware of the reason for the added money, you don't have much support for your claim. Offhand, I do not know if Ford would have "seen" your notation or not. Any argument you have would rely on the answer to that question.


You might check your contract to see if such payments are automatically made to principal or if they are simply applied to future scheduled payments.

for future reference, use two separate payments to make your monthly payment and then any additional payments you wish to pay on principal only.