AboutFinance Guy Expertise 1. All questions relating to finance
2. All practical aspects of mergers and acquisitions
3. Many general business questions
Experience Considerable experience in the area consisting of 25 years in both consumer and commercial finance and business management, including 15 years specializing in international Mergers and Acquisitions with over $100 billion in assets acquired
Education/Credentials Business administration undergrad
Wharton post grad in finance
Awards and Honors numerous corporate awards
Past/Present clients range from small enterprenurial companies to large multinationals
Question We borrowed from a credit oompany to pay for semi truck liability insurance, it was for 10 months @ 15.95% interest (cost of credit figured as a yearly rate) per the contract. The interest was $442.20 for the duration. We lost our driving jobs after just 5 months into the contract, so we were forced to cancel the insurance and in doing so were told that the loan company would get $3200.00 back from the insurance company leaving us owing $628.52 which is exactly what we would owe, including ALL of the interest, even though we only had the loan for 5 months and they are getting about half of the money back from the insurance company. When I asked the insurance broker about the situation he told me the loan company has a habit of "front loading" the interest, I have no idea if that is legal or not. I have written to the loan company with no results, now am wondering if a certified letter of complaint to them may get better results. I need to know if there is anything I can do about this.
Answer Front loading or Rule of 78ths is a dirty little secret of many shady credit companies. However, this is different from taking ALL the interest in the event of a pre-pay, as you have described your situation.
You should get some refund.
I would send a certified letter to the finance comapny demanding an accounting of the formula used to determine the pay off amount.
After receipt, check with your attorney or consumer affairs office, better business bureau or some other consumer protection agency in your state to see what they think.
In the end, you may not be able to do anything about this, but at least you will have registered your complaint and put them on notice that their actions will be reviewed by others.
If you think these guys are bad, however, look at what the pay day loan companies do to people.
