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Alex J. Esq.
Alex J. Esq., Attorney at Law
Category: Consumer Protection Law
Satisfied Customers: 16721
Experience:  Experienced Licensed Attorney
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My husband and I purchased a car 5 years ago. Because of the

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My husband and I purchased a car 5 years ago. Because of the economy, our credit was not the best, XXXXX XXXXX are paying a higher interest rate than normal. I lost my job, however continued to pay (late sometimes). I asked for a payoff and was told that in five years the principal had only gone down about 6K. We paid $22K for the car and are being told the payoff is 16K. How is that legal?
Hello. My name is XXXXX XXXXX I will be happy to answer your question.

I am sorry to hear about your unfortunate situation.

Did you agree to this high interest rates and did the auto finance company charge you this high interest rate in the last 5 years as agreed?
Customer: replied 4 years ago.

We did agree to the interest rate, however it was never explained to us that if the payment was late, that most of it would go to the interest.

Dear Lynn,

Thank you for your follow up.

Were this terms of how payments would be applied to the interest first stated in the auto finance agreement?
Customer: replied 4 years ago.

No, they were not.

Dear Lynn,

Do you have a copy of your auto finance agreement and have you carefully reviewed it?
Customer: replied 4 years ago.

I do have a copy and I will review it to ensure that this was not in the contract. If it wasn't in the contract, what is my next step?

Dear Lynn,

Thank you for your follow up.

If the payments were not correctly applied, then someone in a position similar to yours can generally dispute the current outstanding loan amount and request an audit of the account to determine the correct amount that is owed on the loan.

Also, if the auto finance company failed to correctly apply your payments, you can file a formal complaint against the auto finance company with California Attorney General and California Department of Banking and Finance and this regulatory agencies will investigate your complaint and will take appropriate action upon completion of their investigation.

I wish you the best of luck and please let me know if you have any related follow up questions.
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