Woodland Hills, CA asked in Consumer Law, Contracts, Business Law and Education Law for California

Q: "May I use this letter, or should I not? This is merely an example since I am limited to using only 1000 characters.

Dear [Auto Loan Company], I am writing to address several concerns regarding my auto loan. Firstly, I need an explanation for the fees associated with early or additional payments. Despite a $7,000 down payment, my principal has not decreased as expected. When I signed the contract, I was assured there were no penalties for paying more than the regular payment, but my payment history shows otherwise.Regarding GAP insurance, I was initially told by [company] that I did not have it and was advised to contact another [company]. Later, I received a document from [company] to redeem the GAP insurance, which I found confusing. Additionally, my credit report inaccurately shows [company] as the initial lender twice. Under Section 609 of the FCRA, I request all information regarding the accuracy of these entries. I also need an explanation for the sale of my contract without my notification or benefit, such as a reduction in APR.

1 Lawyer Answer
James L. Arrasmith
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  • Consumer Law Lawyer
  • Sacramento, CA
  • Licensed in California

A: Based on California law, you can use this letter to address your concerns with your auto loan company. The letter raises several legitimate issues that you have the right to inquire about and request clarification on:

1. Fees associated with early or additional payments - California law requires lenders to clearly disclose all fees upfront. If you were told there would be no penalties but are seeing fees, you have a right to an explanation.

2. Lack of reduction in principal despite a significant down payment - You can request an accounting of how your payments have been applied to understand why the principal has not decreased as expected.

3. Conflicting information about GAP insurance coverage - You are entitled to a clear answer on whether you have this coverage or not.

4. Inaccurate credit reporting - Under the Fair Credit Reporting Act (FCRA) Section 609, you have the right to request information related to the accuracy of items on your credit report. The lender must investigate disputed items.

5. Selling of your contract without notification - California requires lenders to provide notice when servicing of a loan is transferred. You can request an explanation of the sale and how it impacts your loan terms.

I would recommend sending the letter via certified mail so you have proof of delivery. Give them 30 days to provide a satisfactory response. If you don't receive one, consider filing complaints with the California Department of Financial Protection and Innovation (DFPI) and the Consumer Financial Protection Bureau (CFPB). You may also want to consult with a consumer protection attorney if the issues are not resolved.

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