Huntington Bank customer upset about $247 auto loan prepayment penalty: Money Matters

Updated at 2:30 p.m.

Q: I recently paid off a car loan I had from Huntington Bank. I didn’t choose them — the car dealer’s financial person did. It was a 75-month loan. I was about to pay my 20th payment when I decided it was smart to just pay it off.

When I called Huntington for a payoff amount, they told me there was an early pay-off fee of $247 and it was applicable anytime the loan was paid off early. After asking the Huntington representative if they belonged to the mafia he replied, “It was in your contract when you signed the papers.”

I’ve recently asked PNC if they do this this, and they said no. Are you aware of this and is Huntington the only one that does this? The only way to avoid this fee was to make the payments as scheduled.

A.R., Euclid

A: Without knowing more, I’ll have to side mostly with the bank on this. First, prepayment penalties are not unusual on a car loan in exchange for a lower interest rate, or a low or no application fee.

There are costs for the bank to run your credit report, evaluate your application (income, risk, etc.) and do the paperwork. If you were to suddenly pay off your loan after one or two months, the bank probably wouldn’t have made enough in interest to cover its expenses. The bank doesn’t want to lose money on you, and it wouldn’t be fair for the bank to raise rates for everyone to compensate for someone who cost the bank money.

Huntington is not the only bank with a prepayment penalty on auto loans. Many banks do for this exact reason.

However, I’ve never heard of a prepayment penalty during the entire life of a 75-month loan. That’s more than six years! (I’m not a fan of six-year auto loans either, but that’s another topic for another day.) Most prepayment penalties are one to two years.

It’s never OK for a bank or a car dealership finance person to take advantage of a customer by not explaining the major terms of a contract. This was a contract. If you didn’t know there was a six-year prepayment penalty, that’s not OK.

But in response to your question, Huntington said it doesn’t have any auto loans with a 75-month prepayment penalty, or any prepayment penalty during the entire life of a loan. Something is wrong. On a 60-month loan, there would be a prepayment penalty during the first 36 months, the bank said. Its longest prepayment penalty is during the first 60 months on an 84-month loan.

I’m guessing your prepayment penalty was at least 36 months on the 75-month loan. If that’s the case, you paying it off in the 20th month tripped the prepayment penalty.

So you need to dig up your contract so we can get this sorted out. I’m happy to help you.

It’s not OK for you to have not read about the prepayment penalty — whatever it is — yourself. Consumers must read contracts in their entirety. No one cares about you more than you.

If it turns out that this prepayment penalty was legitimate, hopefully you can recoup your $247 in the form of a lesson learned that may prevent you from getting hosed on an even bigger contract in the future.

Q: My sister recently changed her preferences on her Key Bank ATM card to select the English-only screen while using the card. Now, when she inserts her card, her full name appears on the screen.

She is very upset and feels this is a security issue as anyone standing behind her can see her name. She has complained to the card issuing department and was told this cannot be changed. Even if she cancelled this card and received a new one, her name would still appear. Also once you make the preference change, you cannot go back.

The person she spoke to at Key said he has received numerous complaints from customers and there is nothing they can do about it.

Can you please check into this and the reason why your name must appear on the screen? I am sure every customer knows who they are and doesn’t need to see their name advertised up on the screen.

J.S., Brunswick

A: This is a bit of a head-scratcher. This is what Key spokesman Jack Sparks said in response:

“This change was part of an update allowing customers to make a one-time language selection. The change was designed to give customers consistency  between how they are greeted at an ATM and how they are addressed by our tellers in a branch. This configuration is very similar to self-service kiosks used in many industries, including by airlines and hotels, and again, consistent with how customers are addressed when they work with tellers.”

Sparks continues: “We took customer privacy and security concerns into consideration when we made this change. Information on the ATM screens is protected by privacy screens and by the customers themselves, who typically stand directly in front of ATMs.

“At this time, we do not believe we can reverse individual customers’ language option choices and in so doing remove customers’ names from ATM screens.”
 
Part of me wonders who at Key thought there was a value to displaying your name on the ATM. Like you said, if you’ve put your ATM card in the slot, you know who you are (hopefully).

That said, as much of a privacy nut as I am, I wouldn’t be too bothered by someone seeing my name on an ATM screen, unless I didn’t want someone who didn’t know what I look like to know where I was at that particular time.

I would be much more concerned about this: If someone was close enough to me to see my name on the screen, then he or she could also likely see me enter my PIN or see the display with information on the screen (like partial trương mục numbers, balances, etc.).

Still, I respect that this bothers your sister and probably other folks as well. Her choices: She can change banks. She can move past this. Or she can elevate her complaint. Besides contacting Key’s corporate office (which she should do in writing, if this is the course of action she wants,) she can file a complaint with Key’s regulator, the Office of the Comptroller of the Currency: (800) 613-6743 or online at https://appsec.helpwithmybank.gov/olcc_form/.

If anyone ever wants to complain about a bank and doesn’t know who regulates it, here’s how to find out. Regulators have an online gizmo called Who Regulates My Bank: http://www.helpwithmybank.gov/national-banks/national-banks.html. Or call 1-800-613-6743 from 7 a.m. to 7 p.m. Central time, Monday through Friday.

In addition, I’m sharing other ATM tips passed along by Key. Most are common sense, but reminders never hurt:

*  Know before you go. Plan your ATM withdrawals before you head for the ATM, and confirm the ATM hours. While many ATMs are available 24 hours a day, some may be open only during local business hours.

*  Have your card out, ready to use and ready to put back into your wallet, along with your cash and your receipt, as soon as you complete your transaction. Count your money later.

*  Some ATMs are enclosed and require you to use your card to open the door. Watch your back, and don’t let strangers follow you inside.

*  Be sure all passenger car doors are locked and windows are up before you drive up to the ATM. If you have to leave your vehicle to use a drive-up ATM, turn off the engine and lock your door behind you.

*  Cancel your transaction if you see something — or someone — suspicious, and immediately leave the ATM location.

*  If you spot someone following you after you’ve made a transaction, quickly go to a nearby well-lit area where there are other people, and call the police.

Q: I just read your column about the man who closed out all four Dollar Bank accounts because they would not let him deposit a third-party check for a relative. Let me say this to you . . . GREAT ANSWER!!!!

Dollar Bank might have also just saved that customer $1,400. A lot of fraud is taking place where someone will send a check to pay for “work performed” like a secret shopper or product evaluator and they tell the person to keep $500 as payment for the work they did and to send the other $900 back by check or Western Union. Then a few weeks later, the check bounces and the trương mục holder is out the full value of the check.

Perhaps the relative had one of those checks and didn’t want to risk depositing it to their own trương mục.

I am a retired US Postal Inspector. The fraud out there is rampant. So glad you educated the readers and didn’t bash the bank on this one. Your advice about depositing the check to her relative’s own trương mục and then having the relative write a check to the customer was right on point. But if it was one of those fraud checks the relative would still be out the money, but at least your writer/reader would not be. Great job!!!!

M.R., Cleveland

A: Thanks for the reminder about these check scams. They’re especially problematic for college students and single parents who are so desperate for money that they allow good sense to go out the window.

Murray is The Plain Dealer’s personal finance writer. Because of the volume of requests, she cannot help everyone who contacts her.

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