(Mild, 'cause I’ve got the flu and don’t have enough energy for an all out rant.)
I’ve got my car loan through US Bank, but we’re using one of those pay it off faster services (seemed like a reasonable idea at the time).
So Saturday, I get a call from US Bank collections. Apparently, I have a late payment. I promise I’ll follow up with my third party folks. Sunday - same call. Urgh. Today, I get the service on the line and they tell me they sent the payment and give me a check number and a date the check cleared. They promise to send a copy of the check to US Bank. I call US Bank, someone takes my information - very nice. I think maybe I’m done with this.
Nope. I just got another call from collections. They tell me, so sorry, but we don’t care what arrangements you’ve made – we need a copy of the check blah blah blah.
Is this for real?? Only two weeks late with one payment (and it’s not even really late) and I get this much harassment? Don’t they have anything better to do?
I have excellent credit and have never experienced anything like this before. It certainly doesn’t make me want to do business with US Bank anymore.
Are you sure the 3rd party “pay it faster” people arn’t the ones screwing up?
Also, are you sure the last payment is two weeks late or is the previous one 6 weeks late?
I’m guessing (but I have no basis for this guess) that it’s a credit reduction company, where they negotiated a lower principle amount. If the OP owes $20,000. The third party will call US Bank and say “How about we pay you $12,000…no?..well then my client if going to claim bankrupcy and you won’t see any of it”
And then you have an $8,000 write-off dogging you for seven years. I’ve known quite a few people whose credit was not only screwed up but cross-threaded by those “debt consolidation” schemers.
No offense whatsoever to the OP, but not everyone understands how those people work. They just see a promise of getting a loan paid down faster and don’t ask for details.
A few years ago my wife wanted to call one of those people (or consolidate her debts into a new loan). Upon looking at her 'financials" she has about $2000 in debt and about $3000 in the BANK. She’s just not that good with money* and she very scared of running out of money. Luckily she asked my opinion before she called them.
*Well, she’s good with money, she just not good at paying down credit cards even when she has they money to do so.
This is the service. What sold it to me was the idea of being done in 44 months instead of 48 months. I’m not a financial maven, but I’m pretty thoughtful and careful and it seemed like an ok deal.
No, I’m not sure it wasn’t the 3rd party.
Yes, I’m sure it was the payment due two weeks ago, not the previous. I checked my statement and double-checked online. US Bank confirmed it, too.
The opening statement says they make biweekly payments. So that basically means instead of making 12 payments per year you make 26 half payments per year, so you wind up make 13 full payments. It’s a great way to pay down your debt faster without feeling it too much, but so far, it’s nothing you can’t do yourself.
I’ll look at it some more.
Looked at it some more. From what I can tell, that’s all they do, it’s nothing you can’t do yourself, it just something they try to convince you that you can’t do yourself. Frankly, I wouldn’t trust them, like I said, it’s nothing you can’t do yourself.
This isn’t an uncommon way to save money when paying down a mortgage.
The only real deception is people shouldn’t necessarily think, “hey, making a half payment once every two weeks doesn’t change how much I’m spending on paying off this loan in a given year, and it saves me money and pays off the loan faster!”
Common sense should tell people that the only way you get out of a loan faster is by paying down the principle faster, you’re making more payments per year, that’s all this really is. If you can afford to make a 13th full payment in a calendar year then it’s certainly not a terrible thing to do at all.
At least when it comes to mortgages, the biggest turn off of going bi-weekly is it generally means you have to restructure your loan with your lender. Many lenders charge fees for this and people often don’t want to go through that whole process. When considering going bi-weekly on a mortgage a lot of people just advise to make a 13th monthly payment each year. That way you don’t have to restructure your loan at all, don’t have to go through some third party company like the OP is doing for his auto-loan, and it has roughly the same effect on your savings.
With my mortgage, I just took the amount of my payment, divided by 12 and added that amount to each months payment…voila 13 payments per year no third party required. But in reality adding any arbitraty amount of extra principle to your payments will help the debt go down faster, one extra payment per year isn’t a magic number. The trick is making sure there isn’t a prepay penalty that will make the whole thing a wash.
Yeah, the ideal way to do this yourself is take your monthly payment (on any type of loan) and divide by 12. Say you have a $1,000 a month payment, so 1,000/12 = $83.33. So instead of paying $1,000 a month pay $1083.33 a month and over the course of the loan you will save almost as much as you would have with a bi-weekly payment plan.
A bi-weekly payment plan will save you more than the above method, but only a very small amount more (even on a typical home mortgage the savings from using the method I explained are only about $1,000 less (obviously this will vary based on mortgage size, interest rate etc) than the savings going bi-weekly gets you.) The only reason bi-weekly saves a tiny bit more money than simply increasing your monthly payment is because you are making payments every two weeks so the principal gets reduced more often and thus less interest is accumulated.
However, most lenders charge a fee for going biweekly, usually this fee will EXCEED or come very close to equaling the savings benefit of going biweekly versus keeping your loan terms the same and simply increasing your monthly payment.
Third party companies like Equity-4-U, which clearly says it charges no upfront fee very likely is charging the OP a small monthly fee. Usually the sum of all those monthly fees added up will be larger than what you would have paid to have you loan restructured to a bi-weekly system with your lender.
Either way I think you’re almost always better off going with just paying a bit more on each monthly payment (such that you make 13 full payments per year) than going bi-weekly. Unless you happen to have a lender who isn’t charging a fee for restructuring your debt.
You make the equivalent of 13 payments over the course of the year. It’s nothing you couldn’t do yourself - many banks will accept 2 1/2 payment checks each billing cycle (and twice they’ll get 3), and if they won’t you can always add 1/12 of the payment to your monthly check, or put aside 1/2 the payment every two weeks and then pay the bill when it’s due - 10 times you’ll have 2 halves set aside and twice you’ll have 3 halves set aside, so you’ll make an extra 1/2 payment twice a year. Depending on how interest is calculated, 26 1/2 payments may save you a bit more during the year than 12 13/12 payments or 10 full payments and 2 1.5 payments.
I get offered “deals” like this on my mortgage every couple of months. They usually want a few hundred dollars for the “convenience” of letting me pay this way.
The only magic in the 13 number is that is how many full payments going biweekly gets you. It’s a bit of a deception, because the company is showing you that if you just split your monthly payment in two and make the payment once every two weeks you save money.
A lot of people look at that and think “wow, my monthly payment doesn’t change and I save money, my loan gets paid off faster!” In truth since our months aren’t all exactly 4 weeks long that isn’t the way it works.
Eh. So I might not have made the right decision going with this service. Can we get back to my rant.
Why is US Bank harassing me so much over so little?!
I’m going to start looking for an option to get that loan away from them, 'cause I don’t want them to get any more interest from me. What a pain in the patookis!
In fact, scant few of them are exactly 4 weeks long.
As to the OP:
USBank is hounding you because they want their money. You’re not off the hook just because you made a deal with some 3rd party. I don’t know, however, if it’s typical for a bank to get that aggressive after just 2 weeks.
You can’t just change loan companies. You will have to refinance the car with a different lender. Your only mistake here is using a third party to make your payments for you. Cancel this “service”, and make the payments yourself. In fact, go ahead and make a payment to them now and the collection calls will stop. You do not want this late payment to go 30 days and get reported to the bureaus. Then you can deal with the third party company.
I’ve received offers from my mortgage holder to switch to biweekly, but I never read through the offers enough to find that! I get paid twice a month and having a shifting payment, and three payments some months, is just not attractive.
I can’t believe that they were expecting to charge for that. Slimebuckets.
Because payments that are two weeks late all too often turn out to be 6 or 8 or 40 weeks late, and if they have a hissy about it now, you might catch up. They really would rather have you make your payments to them than have the debt go to <bass drumroll of doom> collections.
In your situation, you (theoretically) made the payment on time. So provide them with a copy of the cancelled check (front and back! Or the official payment record, if it was an EBT), and tell the next caller that you have mailed documentation of your timely payment, so “please cease and desist.” Use those words.
In providing the copy of the check (If it’s an actual check copy, front and BACK, please. Front only is a waste of postage), please include a letter stating that “collection efforts must cease and desist while this payment is disputed.” Use those words. Then state, in that letter, that when the payment is verified, you demand all fees, charges and penalties be removed, and it be reported accurately to all Credit Reporting Agencies.
If you can’t get that documention, make the payment, and have a hissyfit to the debt reduction company. If the payment was made on time, write a letter to USBank compalining about bearing the onus of their incompetent Accounts Receivables department.
< my credentials are 17 damn years of Collection experience, plus 20 of doing books for businesses & home, and 10 years of attempting to train stupid people who think Quickbooks is magic.>
