Be careful of LS "Financing"

Peter 315 · Feb 23, 2021

I never liked Wells Fargo nor would I do business with them, They are a bunch of crooks.....

Bearsixty7 · Feb 23, 2021

LS mt125 owner said:
So, to update this thread, today I had a rude awakening! I went to payoff the outstanding balance of the tractor loan through Wells Fargo. They charged the full amount of "interest" on the "contract", plus charged a "prepayment fee" of a few hundred bucks, and the daily interest accrued this month.

Before everyone gets on the "read before you sign" band wagon, I did. In all the fancy legal mumbo jumbo, there is a clause that states the interest would be adjusted to the value of the contract at the time of "buy-out". Not "payoff of loan". Just reading the clause makes you believe there are no prepayment penalties, and interest on the loan would cease to accrue at time of payoff. ..... just like every other standard " loan" available.

Needless to say, it cost me more to payoff my loan early, than if I continued paying it monthly for the next 5 years!

So, after elevating my blood pressure, I called my dealer. He recently became aware of this same situation occurring with a couple of his other customers. He told me that he was in process making LS corporate aware of what was happening. There were not supposed to be these issues / clauses with Wells Fargo Financial when they presented the program. He probably can't do anything about it, they were "misinformed" by Wells Fargo about the program. The dealer was upset with this for sure... he was unaware of this "contract" issue until only recently. Bad for HIS business....

Bottom line.... the only way to stop Wells Fargo's "legal fraud" is to have another class action lawsuit against them.... I will jump onto that wagon for sure!

I'll have to read my paperwork again but I thought there was no prepayment penalty after the first year of payments is made, Have you just paid less than a year on it?

I planned to just make payments for 1-2 years and then if other financials workout, pay the balance off. If not, I kept the monthly low enough it won't be a burden.

spruce Deere · Feb 23, 2021

Yep, wells Fargo sucks. We read there 'fine print', then talked to a wells Fargo rep and that sealed it. They suck.

Used my own credit union also...

Some words you can take to the bank....Do NO business with Wells Fargo.

Read my 'bough an XR3140H today' thread....

JCoastie · Feb 23, 2021

agreed, dislike Wells Fargo too.

Avenger · Feb 23, 2021

Ahhh crap. I'm going to need to read the paperwork now. We are doing the debt reduction program, snowball thing. Pay off lowest debts and snowball those payments into larger ones. The tractor is next. I have 3 years to go. Might just keep that payment.

Thanks for the heads up.

fried1765 · Feb 23, 2021

LS mt125 owner said:
So, to update this thread, today I had a rude awakening! I went to payoff the outstanding balance of the tractor loan through Wells Fargo. They charged the full amount of "interest" on the "contract", plus charged a "prepayment fee" of a few hundred bucks, and the daily interest accrued this month.

Before everyone gets on the "read before you sign" band wagon, I did. In all the fancy legal mumbo jumbo, there is a clause that states the interest would be adjusted to the value of the contract at the time of "buy-out". Not "payoff of loan". Just reading the clause makes you believe there are no prepayment penalties, and interest on the loan would cease to accrue at time of payoff. ..... just like every other standard " loan" available.

Needless to say, it cost me more to payoff my loan early, than if I continued paying it monthly for the next 5 years!

So, after elevating my blood pressure, I called my dealer. He recently became aware of this same situation occurring with a couple of his other customers. He told me that he was in process making LS corporate aware of what was happening. There were not supposed to be these issues / clauses with Wells Fargo Financial when they presented the program. He probably can't do anything about it, they were "misinformed" by Wells Fargo about the program. The dealer was upset with this for sure... he was unaware of this "contract" issue until only recently. Bad for HIS business....

Bottom line.... the only way to stop Wells Fargo's "legal fraud" is to have another class action lawsuit against them.... I will jump onto that wagon for sure!

Wells Fargo seems to have an historically poor relationship with their many of their customers

LS Tractor Owner · Feb 23, 2021

Bearsixty7 said:
I'll have to read my paperwork again but I thought there was no prepayment penalty after the first year of payments is made, Have you just paid less than a year on it?

I planned to just make payments for 1-2 years and then if other financials workout, pay the balance off. If not, I kept the monthly low enough it won't be a burden.

I have paid 22 months out of 84. When initially discussing the financing, the dealer specifically stated " no prepayment penalties " when he was asked. What gets me is that you still pay most of the remaining interest based on the initial length of the loan. The prepayment "fee" to pay it off early is a bunch of BS. They just hide the fees and penalties in the 10 pages of "contract".

We used to have 4 accounts with Wells Fargo (business and personal) for years.... until they started charging fees for everything. We closed all the accounts there and moved to 2 different Credit unions. Much, much better rates on vehicle financing, no fees, no charges, and we get interest ( well a small pidlance) on all the accounts. I will NEVER deal with Wells Fargo again for anything!

arits74 · Feb 23, 2021

i paid my tractor off yesterday and i did not have to pay any penalties and it saved me 600 in interest.it was financed through wells fargo

Grumpycat · Feb 24, 2021

LS mt125 owner said:
So, to update this thread, today I had a rude awakening! I went to payoff the outstanding balance of the tractor loan through Wells Fargo. They charged the full amount of "interest" on the "contract", plus charged a "prepayment fee" of a few hundred bucks, and the daily interest accrued this month.

...

Sadly that is a common practice in the finance industry. Is outlawed in some states.

Decades ago my Engineering Economics professor cautioned us about financing. Said to watch for prepayment penalties such as you experienced. Also said to watch for "rule of 78's" which is a convoluted way of doing much the same thing.

Took me some time to figure out what "rule of 78's" was. Goes by several names but was originally a means of using a precalculated table of interest when nobody had an electronic calculator, much less a computer. Rule of 78's was not originally intended to sucker customers but variants apparently used 100% of initial payments against interest until payments transitioned into 100% principle, as a means of collecting the full life of loan interest even when loan is paid off early.