What can I do if the payments on my car loan aren’t be applied to principal as they should be?

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What can I do if the payments on my car loan aren’t be applied to principal as they should be?

I’ve had my auto loan for 5 years. Due to the fact that the auto finance company went out of business a new company took over my loan. However on the last few months my payments aren’t being applied as they should (70% is going to interest). I’ve tried to go back and forth with them but I’m at a loss and really don’t want to make any more payment on this vehicle considering it should already be paid off.

Asked on August 24, 2011 Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

When the new company took over the loan, they took it over subject to its terms--the same terms in the original agreement, and which you had agreed to in taking out the loan. They cannot change the terms of the loan. Therefore, the new company has to apply the payments however  the original loan required. You should therefore first check your original loan documents, payment schedule, etc., to see how the money should have been applied; if it has been misapplied and the company refuses to correct that problem, you could sue them, seeking a court order that they apply the money properly and/or seeking money damages or compensation from them. Good luck.


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