Anyone Know Loan "Laws"?

[84Toyota4x4]

Ok, here it goes... I have a motorcycle thats financed, and I lost my job for a while. I had to cancel the vehicle insurance that I had on it which the bank required because I couldn't afford it anymore.

Now then, I have a friend who works as a finance manager for a motorcycle dealership, and I happened to be telling them about this situation one day, and they mentioned that if the balance of the loan was under a certain dollar amount, insurance wasn't required anymore, and they sited a few banks/lending institutions and the "cutoff amount" that you no longer were required to hold coverage on the vehicle. Some were $5000, some were $3000 and so on.

Anyway, I still hadn't started a new policy for the bike (which I planned to do), and the other day the bank slapped me with a $500 premium out of nowhere for a years worth of "insurance policy" they tagged onto the loan balance.

I had never heard of these "cutoff" amounts, but it seems that if my friend who deals with this stuff everyday knows about it, there could be some truth to it.

I guess I'm asking a few things:

1. Has anyone ever heard of these "cutoff" amounts where insurance is no longer required?

2. Can the bank just slap me with a premium like that for an insurance policy without me signing anything since I already paid for "loan insurance" when I got the loan originally?

Basically, I'm trying to sell the bike, and with the extra $500, it just means that I have to fight to try and get it sold for more so I can pay off the loan with the sale. Without it, I could have had it sold about 4 times by now :mad:

I just cant afford to pay the difference to sell it for a lower amount, because once again, I'm broke which is why I'm trying to sell the damn thing to begin with!

Any advice? I haven't been able to get a hold of anyone at the credit union either. I get put on hold for longer than my breaks are at work, and I get off work after the customer service line is closed, and don't get to the bank until after its closed (credit union, so cant just go to a branch close to work). I also read through the original paperwork, and cant even find where it says anything about insurance being required or anything. It just sucks that my loan balance shot up close to $600 in less than a week because of "loan add ons" from TWO insurances!

If it comes down to it, I'll grit my teeth and bare it, but Id rather see if I can find a way to get them to pull it back since the bike would be sold basically the same day if I can get them to pull that back off the account so I can take a lower offer!

~T.J.

 

[64FJ40]

Since motorcycle operator's insurance is not required by the state, any requirements are purely up to the lending institution. Any cutoff amount would similarly be at their discretion and will vary from bank to bank (and probably not exist at some).

The way I understand it, loan insurance is basically for the chance that you'll default on the loan. It has nothing to do with liability/comprehensive coverage.

Yes, generally they can slap you with a retroactive premium if you were required to have an existing policy and you fail to maintain it. It would be prudent to fully understand the requirements of your loan - you probably signed something stating that you would maintain coverage (and that they would carry a policy at your expense if you fail to do so), but if you didn't, you don't have to pay.

I'd say you're probably screwed on this one. Sorry.

Good luck.

 

[skrause]

2. Can the bank just slap me with a premium like that for an insurance policy without me signing anything since I already paid for "loan insurance" when I got the loan originally?

Yes. If they find that the insurance you have on the vehicle doesn't meet their requirements they have a right to protect their interest by forcing a policy of their choice upon you. It's in the paperwork you signed when you started the loan.

 

[skrause]

Since motorcycle operator's insurance is not required by the state, any requirements are purely up to the lending institution. Any cutoff amount would similarly be at their discretion and will vary from bank to bank (and probably not exist at some).

This has nothing to do with liability, it's 100% comprehensive in the event of damage to or loss of the property interest.

 

[84Toyota4x4]

See, I kinda knew that part about the loan default insurance, makes sense. I read through all the paperwork and went over it for a couple days before I actually signed it, and nowhere in the paperwork that they gave me to read/sign does it talk about requiring insurance. Its all about the loan money, not what its for per say. In fact, I was never told anything about it either. If I didnt know better at the time, I wouldnt have known it was required since she didnt say anything about it when I signed either. They actually mailed me a letter like a week later stating that since I now had a vehicle loan I needed to provide proof of insurance (which I already had - just didnt know who to send it to), but it didnt specify what the limits were to be, nor the deductable amounts authorized or anything. It was a very basic letter.

Sounds like I just need to manage to get a hold of them and fight it out with them - See if I can find out their policy on the insurance requirement, and if they have a "cut off" amount.

~T.J.

 

[skrause]

Sounds like I just need to manage to get a hold of them and fight it out with them - See if I can find out their policy on the insurance requirement, and if they have a "cut off" amount.

They're not going to have a cutoff amount on the "automotive" insurance. The "loan" insurance is different, as 64 said it's in case you default on the loan such as become a deadbeat, go on disability, or die. In such case the loan is paid off and the lender's interest in the property is released. This is usually optional depending on your credit history, and is sometimes dangled as bait for obtaining a lower interest rate. You're dealing with two different types of insurance here.

 

[skrause]

And I'm sorry to say, but TECHNICALLY by dropping your insurance coverage you have already defaulted on the loan contract. You're now a puppet to them more so than before. If you keep it much longer you might want to consider looking at refinancing it with a different lender to get your payments back down to something manageable.

 

[BobR]

See, I kinda knew that part about the loan default insurance, makes sense. I read through all the paperwork and went over it for a couple days before I actually signed it, and nowhere in the paperwork that they gave me to read/sign does it talk about requiring insurance. Its all about the loan money, not what its for per say. In fact, I was never told anything about it either. If I didnt know better at the time, I wouldnt have known it was required since she didnt say anything about it when I signed either. They actually mailed me a letter like a week later stating that since I now had a vehicle loan I needed to provide proof of insurance (which I already had - just didnt know who to send it to), but it didnt specify what the limits were to be, nor the deductable amounts authorized or anything. It was a very basic letter.

Sounds like I just need to manage to get a hold of them and fight it out with them - See if I can find out their policy on the insurance requirement, and if they have a "cut off" amount.

~T.J.

if there was nothing about keeping it insured in the original loan paper work, including all attachments, then they cannot force this insurance on you now.

yes they can do whatever they want with that contract when writing it. when its signed its done. and its put in a stack of other contracts. that are generaly handled the same, often without looking at the differences.

closely examin your paper work and ; you may have just been given free insurance or you just got whats coming.


Bob

 

[skrause]

if there was nothing about keeping it insured in the original loan paper work, including all attachments, then they cannot force this insurance on you now.

99.999993% it's in there. Get out the microscope, the "this is how we'll shaft you" section is always the smallest print.

 

[frontier]

Any loan I've had on a vehicle requires you to have ins. I have even had to show proof of ins. at the dealership so they knew who to contact to let them know what I purchased. From there my ins. company sends them a copy of my new policy. If ins. is dropped from some reason then the bank can put ins. on your vehicle (not for free) or until you reinstate your policy again in which you have to send them proof. They should drop their policy but that doesn't always happen because you didn't keep up your end of the loan agreement. Also I've never heard of a cut off limit & not having to be insured anymore. You are suppose to have ins. for the entire loan until it is paid in full. Definetly read over all your paperwork & if you don't see anything telling you about ins requirements then contact the place you bought it from or the bank that has the loan. I used to work for an ins. co, a loan center, and a dealership .....I'm so ashamed! I hope this helps some.

 

[Mrs. Crusty]

Not trying to be mean here but I say suck it up, get a second job or whatever it takes and get your insurance for the damn thing. Sorry but the bank is merely trying to cover their ASSet and I can't say that I blame them. As long as you owe them for that vehicle, it belongs to them.

 

[Kauaibuilt47]

my guess is that you dont have a loan. You got ur self a credit card. Most motorycycle "special financing" includes a suzuki, yamaha, etc credit card. I know i NEVER saw anything in my paperwork about needing to have coverage and was never asked for proof of insurance.

Best bet is take your paperwork to a lawyer and see what they come up with.

 

[84Toyota4x4]

The payments are the same and everything, right around only $100 a month which is easy now that I have a job again, so its not that I cant afford it any more than I could before or anything, it was only a $500 premium that was added, I could pay it back down in a month, it was more the principal of the fact.

I just wanted to try and be able to sell it cheaper to get rid of it faster so I can buy a car instead. If I cant actually sell it for the amount I need to cover the whole balance now, Ill just keep it.

In all honesty, part of it is the fact that before when I sold it, I would have easily been able to put $700 in my pocket even at a lower price, but since they added this plus the other insurance again, I MIGHT get $150 in my pocket. Just sucks because I was excited to sell it and get some cash back for part of a down payment on a car, then RIGHT as I'm planning on getting it sold, they tack this on out of nowhere so I had to raise the price. I'm just a little frustrated is all.

~T.J.

PS - My "paperwork" consists of ONE page front and back, with most of it "fill in the blocks with info" on the front. Thats is. No fine print, no nothing. Thats all I signed, thats all I was shown. Just a single sheet printed off right in front of me. Theres gotta be more somewhere I'm sure, I just never saw it.

 

[junkyard jim]

First, see if there is anything about "see loan act of such and such". Did you have Homeowners Insurance during this time? (see if they cover your bike) Did you ride the bike? If so and they can prove it, you're screwed because your homeowner's policy won't cover you.

 

[84Toyota4x4]

No homeowners insurance. Riding the bike doesnt matter IMO because insurance for the bike isnt not required by the state, simply the bank to cover their asset, which makes perfect sense to me. So, its not like I was breaking the law by riding it uninsured, just pissing off the bank so to speak. I only rode it once anyway without since its only been uninsured for about two months during the winter. Basically, I figure if I wrecked the bike with no insurance and still owe on it (which my thread about my friend wrecking his just happened to him), you get no insurance pay out, and its simply up to me to keep paying for it. I dont see why they need to add on insurance to it - per say. I mean I do, but I dont. The loan is my responsibility either way to pay, whether the bike can be ridden or not, at least thats how I see it.

My point is just the fact that nowhere in the paperwork I have (it may be in other paperwork I dont have copies of - I need to get a hold of the bank) does it state that I have to maintain insurance on the bike (especially since its not required in WA), and I simply did it because I wanted to have it, and now they're charging me for insurance on the bike without even telling me or anything.

The premium for the insurance theyre charging me is actually less than anything I could get "outside" the bank anyway, so if it makes them happy, Im happy. I could care less about the $500 IF I WASNT TRYING TO SELL IT.

All Im saying is that by them adding the $500 onto the balance, it means I get $500 less when I sell it, which sucks.

If I was keeping it, I wouldnt care, I would just make the same payments and the bank would be happy because the bike is insured, and the fact I dont have "outside" insurance wouldnt matter since its not required on the bike anyway, make sense?

~T.J.

 

[84Toyota4x4]

All in all, this thread is about me *****ing that I lost $500 to my pocket, and trying to find a way to get it back through loop holes instead of just selling the bike and sucking up the loss, which Im sure I will end up doing. I just wanted to see if there was any truth to the not needing insurance on the bike anymore.

~T.J.

 

[BobR]

Theres gotta be more somewhere I'm sure, I just never saw it.

does it mention attachments (or other terms for documents) if so those are considered a part of the contract even though they are not actualy attached it.

this is a method that is used to "dresss up" or hide long winded or deceptive contracts.



Bob