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Posted: Thu Mar 22, 2007 5:27 pm Subject: Car Note settlement

My husband and I have paid on our truc for over a year and still owe over $8,000. I called the creditor today and talked to somone about paying off the account all at one time and would they be willing to accept 6000 for pay off tomorrow, and they told me they would ONLY accept the full amount. Would it be worth my time trying to call and talk to someone else? Or just leave it alone? Any help would be WONDERFUL! Thanks

Posted: Thu Mar 22, 2007 6:45 pm Subject:

Was this truck financed with a high interest loan?

Posted: Thu Mar 22, 2007 7:53 pm Subject:

It doesn't sound like they are actually settling with you... if you pay an account off early, you are entitled to a interest credit rebate against the original finance charge. In other words, you only pay interest for the time you actually borrow the money. That $2000 difference most likely represents unearned interest that would normally accrue over the next 4 years (assuming you have a 5 year contract)

I can pretty much guarantee that you are not going to get different #s by talking to anybody else there. And as time goes on, the account will earn more interest, which will make the payoff higher.

If you think the rate may be steep, you might try refinancing the car through a different lender.

Posted: Thu Mar 22, 2007 7:58 pm Subject:

Sorry, I misunderstood your post. The way I read it, I thought you had $8000 worth of payments left and they told you it would be $6000 to pay it off tomorrow.

I'm sorry to say, in the auto finance business - "it just doesn't work that way." Plain and simple, if they have title to your vehicle, why should they settle? They're a secured creditor. Companies are in business to make money; if they went around settling with everyone who wanted a lower balance, it would defeat the whole purpose of being in business.

I have never seen it done. Not to say it can't happen. But I really don't think they're going to knock off $2k just to be nice.

Not to be flippant, but suppose you loaned your friend $10K. She paid you back $2K and now owes you $8K. Then she calls you one day and asks if you'll reduce her balance by $2000 ... would you do it?

Posted: Thu Mar 22, 2007 11:50 pm Subject:

For argument's sake, if they for some reason are knocking $2,000 off the loan, make sure you get it in writing. If this were actually the case, then keep in mind the need for a 1099 on forgiven debt.

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