Thank you somebody finally gets it.

It's probably in the fine print of the contact. This is probably the newest scam out by loan companies like the PMI of home loans. It took Congress to finally shut down the PMI bonanza somewhat.


Tim Skelton,

Every little bit helps when you're sucking wind. A man of your intelligence knows that. I'm sure it's in the fine print (you should know all about that stuff). They have just suddenly changed the rules since I've been playing the auto loan game which is about 30 years and 4 vehicles that I have paid to the last note.


This is a mainly a heads up for people scheduling their own payments. If you let them draft it out they can't pull this crap. I didn't do this because years ago a bank pulled two drafts at once and it took me almost a month to get my money back. Surprise, Ford Credit managed to do the same same thing in the last year of my loan even though I was scheduling my own payment and amount.

 

If I didn't have an interest free loan I probably wouldn't have bought a new L... I can't wait for this thing to be paid off though because I already have my next toy picked out.

 

If its in the fine print of the contract you always have the option of not signing the contract and finding better terms...

Im confused, you are calling paying interest on money based on how long you use it a scam ? Maybe its true that in the past you had accounts that had "grace periods" but the new one doesnt. In the end you are paying the bank for the privledge of using thier money. If you made every payment of 60 month loan 3 days "late" you would have been a total of 180 days late over the course of the loan. Should that use of their money for an additional 6 months be free to you ? When rates were in the high teens banks didnt quibble much about the small stuff - they wanted the business. Now with rates under 7% they have to be more careful. In other words that "grace" period is no longer BUILT in to the cost of the loan.

PMI is designed to make the market safe to loan money to folks who cant put 20% down. - They are higher risk buyers - It allows more people to become homeowners. The recent change helps more poeple cancel PMI once their loan balance is paid down to 80 percent of the property value and they had a good payment history. Once again you are essentially paying a additional interest rate for borrowing your down payment. Once you have paid that "down payment loan " off those charges go away.

Im not saying I enjoy paying interest on money that I didnt have to pay in the past. And Im not a fan of paying for insurance that doesnt directly offer me any benefits BUT if thats what it takes to get the loan then thats what it takes.

Interesting article on PMI here
http://www.frbsf.org/publications/consumer/pmi.html
Putting on flame suit
Doug

 

Leeann,

I hear you. When I bought my L in 2000, 9% was a good interest rate. We traded my wife's 2002 Jeep Liberty Sport for a 2005 Liberty Limited and got a $2000 rebate along with 0% interest. She was upside down by $1200 because of mileage and we still walked away with a more expensive vehicle at $60 less a month. Manufacturers are giving the best deal I've ever seen.

 

Doug,

No flame suit required.

The point I'm making is they have changed the way they do business. There has always been a grace period on auto loans in the past. The credit card companies were one of the first to take it away. Five years ago when I got the loan I didn't check every little detail about it which is my fault but doesn't make it any different that they slipped one in on me legal or not.

With a credit card company at least you know it's happening the next month when they slap a big late charge on you for being one day late. It doesn't take but one time of that happening to let them make interest off of my money from then on because the payment is so early.

The PMI made companies tons of money because alot of people went way past the 20% mark or paid the 30 year loan in full with loan companies never telling them they could drop it. It was legal because if you didn't know they didn't have to tell you. It was still wrong anyway you slice it.

I guess the moral to this story is read the full document which could take a while even though they try to rush the crap out of you in the finance guy's office (I'm sure so you won't read everything). If you're an old dog like me you think it's business as usual because you've done this several times before but 5 years later you get the surprise ending that you didn't see coming. I guess it's like four threads in the sparkplug holes, leaking head gaskets and fires from a leaking brake switch, I should have seen it coming.

 

Why do everyone think as soon as u deposit money into ur bank account it is credited to ur account "instantly"???

Even with the age of computerization..most major banks now run midnite or late weekend deposits.....it is not instant....

Thus...why complain that that Ford Credit is bad when its your own misunderstanding about your banks operations....you made a few late payments...and a small amount of interest acumilated...happens to us all...no sweat....

I have had good success with Ford Credit...and its serious BS about them being "money hungry"....lol

 

they are quicker now with the "check 21" regulations that is moving banks away from having to return the paper checks for payment. they are now imaged at the bank they are deposited/cashed at, and if it is a transit item, an image of the check is returned electronically to the bank they are drawn on throught the federal reserve clearing house. this decreases the float time which was 3-5 days for a local bank, and 5-10 days for a bank in another city/state. the float time is cut down to as little as 2 days. for that period, the bank does not have your money. on larger items, especially for customers that are not well known, we place holds on funds deposited until we are paid on the check.

 

I think you may be confused about the difference between a 'Late Fee" for which you almost always , if you have decent credit and are using a reputable lender, get a grace period of some kind, and how interest is computed. The belief that you pay all the interest up front and then pay down the principal is not really true, your interest is computed theoretically daily but for all practical purpoase whenever a payment is recieved. Say you send in a payment that is 5 days before the due date. What they then do is figure the daily interest that has accrued since the last payment was credited, deduct that from whatever you sent, (and apply it to "interest paid") and the remainder, whatever it may be, is deducted from the principle balance. Your inital loan documents show you your payment schedule assuming every payment is credited EXACTLY on the day it is scheduled to be, and there is no other way to really do that. Now if a payment is recieved a day early, more of it will go to principle, and less interest is paid overall (interest is strictly a "pay as you go" thing, every payment recieved, if it is more than the interest owed, zeros out the interest side of the transaction every month). Typically, this amount is a few dollers per day, and the effect it has, both early and late, are on both the total interest paid and on all future interest calculations. Over the term of a 60 month note, it could very easily be $165, just from a day here, a day there. There is no need for any late penalties to be included to add up to that amount, just a differece in how the interest calculations worked out. In the end, if you do the math, you still paid the daily interest rate you agreed to for the number of days that the money was 'out".
Years ago, because it not as easy to do these calculations as often as needed to be this precise, a lot of lenders didn't bother. When computers made it easy to do, and some MBA discovered there were more people a day late than a day early, it became common practice. Mortgage loans have alway been this way, BTW.

Hope this helps,

G

 

I think this guy just wanted to send a "warning" to read the fine print..He may have slammed Ford a little..and all other points are valid..But for what its worth..to me.....He might make someone who is going to buy a new vehicle..A little bit more "aware" of whats in the new contracts..

I am glad he posted this..Though I am not buying any new vehicle soon..It might make me read a little more..when I do..In 2032 when my Lightning is paid off..LMAO just kidding on that..its really 2031

 

Matt,

It's good to see somebody else get's my meaning. Damn, a whole 2 people out of all these post. I did slam then a little hard but I was as pissed at myself as I was them. I mentioned this to a guy I work with and he had know idea this was happening in the world of auto loans either.

Almost all of my payments for the last year (that's as far as it shows) have a post date of the 27th and the due date was the 25th. It takes them 2-3 days to post according to their site and that's about what it was. Like I said if I had of known I would have push the due date back until the 27th for a cushion and let them do auto pay. I would have been $165 to the richer.

Hindsight is 20/20 and this is a headsup for people that don't know.

 

Its all good LBOLT!! this site gets pretty HARSHHHHHHHHHHHHHH...just keep doing what ya want..dont worry what anyone else thinks..And let me know if you see Elvis soon!!?? Memphis right??? Yes I was walking in Memphis Walking with my Feet 10 feet off of Beale..LOL

Oh god EDIT your in Mississippi..Memphis something..Sorry but thats still a good song!!

 

Everyone gets your meaning, we just don't agree with it. It was pretty clear: "They were already getting 9% APR out of me but I guess that wasn't enough." The classic David versus Goliath, greedy corporation squeezes the little guy, big businesses are evil post.

You incorrectly railed against Ford for charging you more interest than you contracted for. As was pointed out by Gregg, all that Ford was doing was seeing to it that it got the interest that it was due.

 

Matt,

Thanks. Actually, I'm from Memphis. I was born and lived there for 38 years. I moved to Olive Branch, MS which is one of many suburbs surrounding Memphis. This one just happens to be across the state line.

Tim,

I wouldn't know what it is like to be so perfect with everything being so cut and dried. Do you monitor everthing in your life with such perfection that nothing ever slips up on you and nothing ever changes that you don't catch? Has practicing law made you that cynical? Maybe it's an occupational hazard.

My daughter just finished her freshman year at Ole Miss and plans on attending law school there. I hope the hell she doesn't turn out that way.

 

Chuck,
I haven't seen you in a while, but I don't fully understand Ford credit myself. They are looking out for themselves only.

In December I bought my wife an expedition. Payment 305.00 a month. The first payment I made was 350.00. no big deal, I assumed the extra money would come off the balance of the loan. The next payment comes in and it is only $260.00. I called them and tried to get them to explain why they applied the extra money towards next months bill and they said that they did not do that. The extra funds went to principle. They went into some rant about how the computer figures the invoice each month and so on. I paid the smaller amount and the next month the bill was for what the contract said. Amazing how it went back even though the extra money the first month went towards principle according to them.

It looks to me like they expect you to be ignorant and pay the smaller amount each month so they will collect all their interest. As far as I am concerned the contract said the payment was for XXX each month so the payment should stay XXX no matter how much extra you send to them. I guess they are counting every penny they can.

Later
Marvin

 

Marvin,

How's it going?

Isn't it funny how they adjusted your next payment down to get things back in line and never adjusted mine up. If they adjust it up you become aware and that's not good business practice to make money.

They are hoping if they keep adjusting yours down you will get tired of the rollercoaster effect and pay the $305 at the right time like a good boy. They have people like most big companies that figure all this stuff out. The address that you mail your payment to is a P.O. Box and I'm sure this is no accident. Nobody is there to sign for receipt of anything. I'm not spouting conspiracy theories here but just pointing out that most of this stuff is purposefully done to maximize profits. It's all above board.

Below is what is written on the top of my last online payment statement. I went back to look at previous statements and found only advertisements at the top. I also looked all over the Ford Credit site and this information is not found elsewhere. The third paragragh (Under the terms of your contact) clearly states how it works.

I'll pay my extra $165 like a good boy because that's what is on the contract. In the past auto loans were not done this way through my local banks and I'm not sure they are now without calling. At this point I just want people to be AWARE of how it works.

Dear Customer:
This is to inform you that the FINAL PAYMENT regarding your Retail Installment Contract is due.

If your scheduled monthly payments are automatically deducted from your bank or credit union account each month, the final payment amount will also be deducted on the due date. If your scheduled monthly payments are NOT automatically deducted from your bank or credit union, PLEASE MAIL your final payment with the remittance coupon below.

Under the terms of your contract, the amount of your final payment may be greater or lower than your scheduled monthly payment for the following reasons: - Payments received before or after the scheduled due date decrease or increase the interest cost / credit charges. - Payment extensions increase the interest cost / credit charges. - Due date change(s) increase the interest cost / credit charges. - Under/Over payment of the regular payment amount during the contract term can increase or decrease the interest cost / credit charges.