5 On Your Side

Woman battles with bank over paying extra on loan

Posted December 10, 2008

— Most of us have experience with mortgages and car loans. There is the part of the loan that is the principal and part that is interest.

In general, if you pay extra, it is applied to the principal so that you end up paying off the loan quicker and paying less in interest.

That was Melissa Cape's plan, but that is not how it worked out.

“It seems crazy. I don't understand it. I can't explain it,” Cape said.

Cape got a home equity line of credit with Wells Fargo to help with some medical bills. She wanted to pay extra toward the principal to pay off the loan sooner. So she called Wells Fargo to find out how to do that.

“They said, 'No problem. That any payments that came in over and above the payment that was due, they automatically applied to principal only,'” Cape said.

So Cape paid an extra $100 in July, but her next statement showed the payment was applied to the interest. So Cape called Wells Fargo again.

“I thought it was probably an error. And they acted like it was. They said, 'We'll get this corrected. We apologize. Let us look into this. No problem,'” Cape said.

Just to be sure, on the next several extra payments, Cape wrote, "Apply to principal only," but Wells Fargo continue to credit the interest. After a lot of back and forth and assurances it would be fixed, a representative told her something she didn't expect.

“He politely told me, 'They were the bank and they could apply payments how they wanted to,’" Cape said.

She said many more phone calls still didn't fix the problem,

“I'm amazed. I mean, at points, I was in tears. At other points, I was angry,” Cape said.

When WRAL's 5 on Your Side called Wells Fargo, spokeswoman Mary Berg had a representative call Cape and resend a letter the company claimed it mailed in August. The letter explained where to send payments to make sure they were credited to principal.

Berg told WRAL the situation is fixed, but Cape is still waiting to see proof.

“It seems simple. You just write a check and it gets done. It hasn't been. It hasn't been that simple at all. That home equity line has been a nightmare,” Cape said.

Cape said she cannot tell if the error has been corrected because she hasn't received any monthly statements.

Wells Fargo says they have been sending the statements, but will now resend them certified.


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  • SME2 Dec 15, 2008

    I had Wells Fargo for my home loan before refinancing with SECU and had no problems what so ever. It sounds to me like she did not know what she was doing.

  • momee Dec 15, 2008

    We had Wells Fargo after our finance company sold out. They were awful! Every year for some reason they claimed that our payments were going up because of taxes! But our county taxes never increased. So when I asked for the 'extra" escrow money I was told at the end of the laon we would receive it??? no way was I waiting 25 yrs to get my money.. So we swicthed to BB&T and have had no problems.

  • justwondering2 Dec 12, 2008

    Capital One is really difficult to deal with. I took an auto loan with them because of the low interest rate from the dealer. My payment was due on the 30th. I was making one full payment around the first and the middle of the month.Doubling up for early payoff. However Capital one was not applying 2nd payment to principle and when the 30th came they were charging a late fee for the payment not being on the 30th. Even though I had already made two full payments earlier in the month. I refinanced with my bank. I feel for consumers who have to deal with these crooks. Where are the laws that protect consumers from corporate rape and legalized loan sharks?

  • RDUTEC Dec 12, 2008

    Got our loan for 36 years through the state credit union. Doubled the payment on most months and less on some, but always paid more than the regular payment. Paid the house off in 12 years.

    We did watch the statements each month. Never had a problem though. I had different experience with another bank though with a earlier home. Nearly every month, had to call and have the payment corrected.

    Best idea, check and make a lot of noise if there is a problem.

  • MamaBearNC Dec 12, 2008

    Well now I'm scared....my loan was sold to Wells Fargo

  • clickclackity2 Dec 11, 2008

    Wells Fargo is a actually notorious for their bad business practices. They have been sued before for their practices and a class action lawsuit should be filed again. Although, I will never do business with them and never have done business with them, I know from other's experiences that the same has happened to them. Beware before doing business with those people. They try and make it nearly impossible for you to pay off your loan. I'm sure you'll be hearing from the woman in this story again.

  • jse830fcnawa030klgmvnnaw+ Dec 11, 2008

    NCSULandscaper, I totally disagree with your statement that "Im guessing like usual, people didnt read the instructions or the statements and blame someone else for their screwup." If a bank does not provide such instructions in clear text, they are the ones making it impossible to pay down the principal. As I posted earlier, Chase made it nearly impossible for me to pay the principal in addition to my regular monthly payment. I wrote down the instructions, reviewed it with Chase's customer service, and when the entire "principal" payment went to interest, Chase's customer service changed their story even though I told them specifically who I talk to for the instructions.

  • jse830fcnawa030klgmvnnaw+ Dec 11, 2008

    2 things about this article:
    1) She should go online and access her account for the statements. Her paper statements could be either lost in the mail or stolen by someone trying to do some ID theft.
    2) This behavior is not unusual for non-local banks. Chase makes it next to impossible to pay down the principal. I have to mail them a check and mark it clearly PRINCIPAL ONLY, and they would not guarantee that they would process it correctly. I did an online payment to principal, and they applied to interest and they totally refused to reverse it.

    Banks like Wells Fargo and Chase do not want to lose their customers' interest payment ... that's pure profit.

  • hazeyc Dec 11, 2008

    I haven't detected any problems with Wells Fargo but I'll keep an eye out.

    I do submit my payments through online banking and my bank guarantees delivery by the date they said they would deliver. I usually pay by the 10th for the next month - way ahead of it's due date.

  • MRay2503 Dec 11, 2008

    I payed off a 48 month car payment in 30 months through a credit union. Not once did I have a problem with extra payments going towards the principal. I will NEVER get a loan through a national bank if I can help it. Local banks and credit unions are absolutely the way to go.