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Approved but quoted payment and rate don't match! Huh?!


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My CU approved me, over the phone and now via email, for $27,000 at 1.55% for 48 months.

On the phone the rep told me my payments would be $625 a month.

Every calculator I can find tells me that the payment on above would be approx $580 or that for a payment of $625 a month at 1.55% the loan amount would be $29,000 or that a payment of $625 a month for a loan of $27,000 would have 5.3% interest.

 

I was also approved for $28,000 at 3.75% for 48 months with a payment of $629.

 

What am I missing?

 

Is 1.55% not the "real" interest?

 

I was so happy to be approved but now feel like I've missed something vital.

Thank you.

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What am I missing?

 

 

It's called payment packing, which is illegal.

 

 

Many credit unions when you first sign up with them, will sneak a little piece of paper in their packet that puts CL & AH ins on products automatically that your purchase, as in an auto loan, or a credit card. Lots of people fall for it.

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What am I missing?

 

 

It's called payment packing, which is illegal.

 

 

Many credit unions when you first sign up with them, will sneak a little piece of paper in their packet that puts CL & AH ins on products automatically that your purchase, as in an auto loan, or a credit card. Lots of people fall for it.

 

 

What is "CL & AH ins" if I may ask. I've never heard of this or "payment packing." Shows you what I know!

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I emailed asking exactly what the payments would be and the Credit Union confirmed that their loan of $27,000 at 1.55% would have payments of $629 (it went up). And that's with automatic withdrawal.

I spoke with the other lender and they confirmed that on their loan of $28,000 at 3.7% my payment would be $629. And that I was approved up to $50,000 at that rate for a used car 2009 or newer or a 2008 with 100,00 miles or less.

 

Can I opt out of the "packing"? Is it illegal in California?

This credit union has been my only bank for over 15 years. My checking, savings and mortgage are with them and I'm disappointed that I'm having to research their offer because something is fishy.

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Same length for both - 48 months.

Can the CU tell me that the 1.55% was only on a loan that includes the insurance they've added and quote a different rate for same amount and terms without it?

Is CL & AH ins usually mandatory? (Which doesn't really make sense because I already have life and health insurance.)

I wonder how they would think I would not notice that the payment wasn't mathematically correct.

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I'm not saying that's what they did. Merely if they are like all of the credit unions I know of I would immediately suspect that. The Fed reg z box of the Risa you sign would have the total amount financed.

 

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They must be adding something somewhere and I'm sure were going to tell me about it at some point. I will ask as soon as I can actually talk to someone. Thanks for your help.

If something like insurance were added to one's loan is it usually optional for a borrower to purchase it? And in general practice is a loan's rate tied to whether or not a borrower purchases things such as insurance that might be added to a loan?

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Ancillary product cannot be a condition of the loan. They are optional and must be signed for under separate agreement. The purchase or declination thereof may not influence the Apr

 

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Update: I ask how they arrived at the payment amount because it seems mathematically impossible. "Oh, well we use a loan calculator."That's what I've used and I come up with $580 monthly." "Well, which calculator were you using?" I used YOUR CREDIT UNION CALCULATOR, I used the the link from YOUR LOAN APPLICATION." "Let me check." Puts me on hold - "Oh, I see what happened, the person who called you with the approval included loan protection for you" "Really?" "Yes, it's always a good idea. If you're disabled or die your payments are covered." "Please remove it - I have disability insurance and if I die I won't care if you get paid. What are payments now?" "$580.46"

Un-forking-believable, I knew I'd need to be on my game for car price negotiation and signing loan documentation, but didn't think I'd get runaround as early as receiving approval.

Thanks a lot - again - for your input.

Where do I put my application approval info? Creditpulls?

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In some states and some insurance companies you can add GAP to your regular car insurance on a monthly basis. This tends to be less expensive than single-payment third party GAP. Also you can easily drop it once you have positive equity.

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