Submission Number: 00051
Received: 11/14/2011 9:47:27 PM
Commenter: Erica Hastings
Agency: Federal Trade Commission
Initiative: Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles; Project No. P104811
Attachments: No Attachments
Used '04 Kia Optima bought in Milwaukie Oregon at Auto Town Pontiac GMC on 1/20/07. The sales person said if we made our payments on time for a year we could refinance for a much lower APR, and how great this would be for our credit. We would NEVER have signed this loan if we knew how the interest would be calculated. I never realized the problem with this loan until about 6 months later when I saw that the principal was not going down on statements. By then it was far too late to do anything about it. Nobody will take this car as a trade in, nobody will refinance this type of loan. I just hope the car will still run by the time the loan is paid. This was a “Rule of 72” loan. I know it was legal, but it isn’t ethical to do this to hard working Americans. I can’t afford to bring an attorney with me to buy a car. Please push for ethical laws which help keep money in the pockets of working people so they don’t have to turn to government entitlements when all their assets have been leached away through what is basically a shell game.Sticker Price: $14,687.00; Down Payment $1,000.00; APR 19.99 percent; Finance Charge: $10,533.80 I understood this to be the interest which would accrue daily or monthly based on an amortization type schedule like the previous auto loan I had taken out. I thought if I refinanced or paid off the loan early, the interest would be calculated based on the amount paid to that date against the principal, applied to the APR.Front of form says:“Prepayment. If I pay off early I will not have to pay a penalty” This reassured me that I could refinance, and/or pay the loan off early and not have to pay the entire $10,533.80 Back of form says: “Prepayment. I may prepay the unpaid balance of the Amount Financed in full or in part at any time without penalty. If I do so, I must pay the earned and unpaid part of the Finance Charge and all other amounts due up to the date of payment.” There is a paragraph of fine print which is the only section in the entire form where the heading is not in bold type: “Payments and Interest Calculation. I will pay you the Total of Payments according to “My Payment Schedule” shown above. Any payment listed on the first line of the schedule is a deferred down payment which does not bear a Finance Charge. The payments listed on the second line of the schedule are equal consecutive monthly payments which are due on the same day of each month, beginning on the date shown. However, the amount of the last payment will be adjusted to include interest figured on the Principal Balance I owed, for the time I owed it. I will pay interest on the Principal Balance outstanding each day at the Annual Percentage Rate. The Total of Payments and Finance Charge shown above assume I will pay exactly as agreed. If I pay late or less than the required payment, the Finance Charge is increased. If I pay early or more than the required payment, the Finance Charge is decreased. Payments will first pay interest owing to the date you receive my Payment, then Late Charges, and the remainder will reduce the Principal Balance I owe.” The form can be purchased on the Oregon Vehicle Dealers Association website – OADA Form 300 (10/04) Simple Interest - OREGON © Copyright OADA Services, Inc. (2004) All Rights Reserved (800) 766-6232 The printer makes no warranty, express or implied, as to content or fitness for purpose of this form. Consult your own legal counsel.
These practices are bad for the entire economy when large numbers of people are preyed upon in this way. Our household makes about 70k a year with very steady jobs and no dependents. There is no reason we should not be able to own a home - but our credit is trashed because we were naive and made mistakes many years ago which we can never get out from under - but we continue to pay our taxes and live modestly in effort to pay down our debts and repair credit. We have good jobs, but no assets, no retirement savings, just hoping for a better future...