Legal Question in Consumer Law in Maryland

I bought a new Saturn in February 2007 while going through a divorce. I pay $388 a month. I wanted to sell it a few months ago so I checked my payoff and it says I still owed $8k. I figured I'd wait, so I just checked the payoff today and it says $8300! And that I have 26 more payments - I have a 6 yr loan and ends Feb 2013! I got a copy of how the payments were applied and it makes no sense! One month almost all goes to finance charges, then the next, most goes to principal. The finance company says too bad, I owe 26 more payments. How is that possible??

Asked on 2/20/12, 10:07 am

1 Answer from Attorneys

Cedulie Laumann Arden Law Firm, LLC

Looking at your promissory note, the interest rate and amortization schedule is essential to answer your question. Without knowing the original loan amount, the interest rate and so forth one cannot really say whether the finance company is properly treating your payments.

In some cases, a lender will structure a loan so that the borrower pays less than is necessary to pay off the interest. In other words, the debt never gets smaller or otherwise takes an extremely long time to pay off. Sometimes the interest rate will be high and there will be a "balloon payment" at the end so that if one keeps paying the regular monthly payment something is still owed at the end of the loan. That being said, not every lender follows the law and some have unethical and/or illegal practices. If after reviewing all your documents you still have questions you may want to contact the Consumer Protection Division of the Attorney General in this state.

While I hope this general information helps it does not substitute for getting specific legal advice on your situation.

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Answered on 2/20/12, 12:22 pm

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