5 On Your Side

Woman battles with bank over paying extra on loan

Posted December 10, 2008 4:46 p.m. EST
Updated December 10, 2008 6:06 p.m. EST

— 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.