My daughter bought a car in November. The dealership provided financing but it is through Bank of America. She has been paying extra on the loan but we have become convinced that they are not allowing her to prepay as the amount applied to principal isn’t increasing and conversely, the amount of interest isn’t decreasing. Her loan documents seem to state that she can prepay. Maybe we’re being petty but it feels like they’re taking advantage of a young adult here as she keeps getting the (insulting) “this is how you calculate simple interest” yada-yada instead of an actual answer to her actual question. Any thoughts on recourse here? Do we need to report BoA?
Have you been able to determine where the extra money is going?
Don’t assume anything.
Try to get a copy of the signed contract, read the part that refers to early or extra payments. Also send a written request for a written statement of the current status of the account.
If you speak to anyone on the phone and they cannot answer your questions ask that they escalate your call to a supervisor or the next level of customer support. Always ask for the person’s name that responds immediatly, jot it down, and use it when talking to them.
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You could also look into refinancing the balance at a credit union or a smaller bank that has better customer service. In fact, you could probably make an appointment at one of these, bring in all the paperwork and record of payments, and have a CU or bank officer help you and your daughter decipher everything (even if you don’t end up refinancing).
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What options does the payment page give her (assuming she’s paying online)? I could be wrong, but I think with most loans, unless you give specific instructions that extra money should go directly to principal, I think the default is to satisfy the interest owed to the bank first, then the principal. On a previous auto load I had, the bank made it very easy. Besides the normal monthly payment, they had an additional field for extra principal. My current loan (with a manufacturer) is more difficult. You have to choose between different types of payments like regular payment, principal only, etc. So I end up making my regular payment one day, then log back in a day or two later to make a separate principal only payment to accelerate the payoff of my loan.
Most public-facing businesses have someone in their organization in upper management who cares, and is evaluated on the quality of that organization’s public image.
That person will probably have a team of middle managers 3 or 4 levels up from the first person you talk to when you call customer support.
The job of the first level of support is to mollify the people who call in with problems and complaints as fast and efficiently as possible. They usually have a fixed procedure and a limit on the costs associated with any remedy the offer you. I they can’t fix your problem, they may bump your call up to the next level of support, usually called their “supervisor.” The first level people are evaluated on how many problems they themselves solve, (or make go away) at the lowest cost and shortest time taken.
The second or third level of support is there to catch the exceptions and to prevent problems from getting to upper management. This person, or his/her immediate boss has more latitude to solve your problem and is much more motivated to prevent your complaints from reaching the public’s attention and/or impact upper-level management’s time and resources. The problem with the second-level of support is that you are often just passed to another first-level person who’s helping a peer worker.
To get anything done with a valid complaint you usually have to get to the 3rd or 4th level in the CS department. This is the person who really cares if your complaint gets to the VP level. When you get this person on the phone you have a real chance to get action. But you’ll need to be honest, sure of your facts, courteous and respectful.
The best leverage tools I’ve found to have my concerns escalated lie in social media and Youtube, especially large national organizations.
Added: I’ve found that the key person in an auto dealership is the General Manager, and occasionally the owner of the dealership.
Thank you all for your helpful information. We don’t really feel like going through all of the intensive investigation and I think we will be going the route of talking to a couple of local credit unions about refinancing as this was the route we had thought about taking even back when she bought the car. (Big banks are so infuriating.)
There’s no question about money disappearing, she’s just not gaining any benefit from prepaying.
Most auto loans are rule of 78 regarding interest.