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Discussion Starter · #1 ·
For those of you who finance through Hyundai Finance and pay extra every month (or even if you don't), are you seeing issues with how they calculate the remaining balance?

Allow me to explain further: we're financing part of our Palisade (rest was a big down-payment). The part that we're financing is over 5y @ 1.9%, the standard rate offered by Hyundai. As any good debtor should, I pay more than the required monthly amount every month, in order to pay the car off early and minimize the interest. This is where it starts going wrong.

They apply the extra money to next month's payment, rather than the principal. I know Hyundai isn't alone in doing this, but it's not what I want. The whole point of putting extra money against the principal is to lower the interest. I'm not trying to buy myself a buffer of a few months here. I have to call them in order to have them apply the extra $ to the principal. There's apparently no way to specify that I never want the extra $ to go towards next month's payment. I have called them to do that with the first 2 payments, and was told I only need to call every 3 months, because they can do that retroactively for the last 3 payments. So I waited another 3 payments and called again. And this is when I noticed that things are way worse than I thought.

Please do me a favor and log in to your account. Then under Payments, go to Payment History. It will give you a table with details of your payments, how much goes towards interest, how much goes towards principal, and the remaining balance. Check that remaining balance column. For me, it's all over the place. The remaining balance does not decrease by the amount that is applied to the principal every month. It decreases less. It's not even logical from month to month (normally, you pay a little less towards interest and little more towards principal every month). Mine looks like no pattern that I can establish. What does yours look like?

Paying extra $ every month seems to only make things worse. I can see where they applied the extra $ to my principal the first 2 times I've called (and not the last 3 payments). And it correctly reset my monthly payment to be the full amount the first 2 times. But now, all of sudden, they seem to think I've paid enough extra that my March payment isn't necessary anymore.

First, that's incorrect, because if they have correctly put the extra $ from my first 2 payments towards my principal, I can't have paid enough extra $ to earn a free month yet. But I did the maths, and adding the extra $ from my first 2 payments to the last 3 does add up to more than enough $ to get me a free month. So much for applying that extra $ towards my principal!

Second, instead of listing my next due date as April and skipping March, they skip two months and tell me my next due date is in May! I have paid enough extra $ for a free month, but not 2! This is nuts.

Iv'e tried calling them several times. Twice, I was told they would look into it (and that they had just updated their system and had issues). Twice nothing was done. Today, I tried calling for the third time and I get a message to expect longer wait times because of COVID-19. Fine, but then it hangs up on me. I'm not going to blame anyone for not being at work at the moment, although it would be nice to have a recording stating that, rather than hanging up on people.

I've had about enough of them. I'm interested in hearing whether I'm alone in this.
 

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Look this up on the internet for a deeper explanation.
Rule of 78
A practice in which lenders amortize repayment of short-term loans in a way that the borrower pays most of the interest earlier. For example, in a 12-month loan, the borrower will pay nearly all of the interest over the first, say, six or seven months before his/her payments cover any principal at all. The Rule of 78 guarantees that the lender will still make a profit if the borrower repays the loan early. However, it does not do anything to protect the borrower and is illegal to use for loans with a term longer than 61 months.
 

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Per Hyundai FAQ's

Why did my extra or over-payment get applied to my regular monthly payment and how is interest calculated on my account?
Any overpayments made on an account are automatically applied and will appear as a credit to your monthly payment. Please be advised, if there are fees due on your account, the amount overpaid is first applied to fees and then all remaining amounts towards the principal balance of the account.

We calculate simple interest on retail accounts on a daily basis based on the current principal balance, the interest rate, and the number of days since your last payment.


I do not believe Hyundai is using the Rule of 78 financing. Plus, the Rule of 78 Loan is not legal in the following states:
States outlawing the use of the Rule of 78s formula in installment loans of five years and less:
ArizonaMichigan
DelawareMinnesota
IdahoNebraska
IowaNevada
KansasNew Hampshire
MaineNew York
MarylandOregon
MassachusettsSouth Dakota

Vermont
Source: CARLAW, a monthly legal reporting service for legal compliance specialists in the automobile industry.

Interesting thread. My information came from a 2001 post on Rule of 78 -- Watch out for this auto loan trick
 

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Discussion Starter · #5 · (Edited)
Yeah, as @KansasLimited mentioned (and quoted from their FAQ), they use a simple interest calculation. This isn't a mortgage or a rule of 78.

For example, say your balance is $10,000 after one of your payments, your annual rate is 1.9%, and your next payment takes place exactly 30 days later. The amount going towards interest in that next payment is calculated as such:

Daily rate = 1.9 % / 365 days = 0.0052 %
Daily interest on $10,000 = 0.0052% of $10,000 = $0.52
30 days between these hypothetical 2 payments means the interest accrued during that period and that will be paid out of that second payment = $0.52 x 30 days = $15.60

I have confirmed on my account that the calculations are correct for the interest, in the sense that they use what they think is the remaining balance on the principal, and then apply the correct daily interest, multiplied by days between payments. But the balance is wrong in the first place: they're not correctly lowering my balance every month by the amount I am paying (minus interest owed that month). So it affects the interest calculations.
 

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Hmmm... my account/payment history shows excess monthly payments (made via ACH so it process the same day) being correctly applied to principal and the remaining balance is correct to the penny. I've been doing this since I bought it 2 months ago. Someone else had mentioned that they needed to call every month to get excess payment applied to principal so I checked into this before buying to confirm that Hyundai Financial uses simple interest & applies excess to principal since this is what their website says they do and what their contract also stipulates. This is what I got from them back then and like I said, I can verify that it's being done correctly for my account without any need for calls...

Please note that once the interest accrued since the date of your last payment has been collected, any additional funds are applied to the principal balance of the account. This will appear on your statement as a credit towards your next payment because that is the only way we have of showing that amount to you on your statement. It is a limitation in information portrayal and not a misunderstanding in proper maintenance of your account.
If you continue to make extra/over payments, you will continue to see the 'Total Amount Due' decrease, but be assured that the overage amount is being applied to your principal balance.
 

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Discussion Starter · #7 ·
Hmmm... my account/payment history shows excess monthly payments (made via ACH so it process the same day) being correctly applied to principal and the remaining balance is correct to the penny. I've been doing this since I bought it 2 months ago. Someone else had mentioned that they needed to call every month to get excess payment applied to principal so I checked into this before buying to confirm that Hyundai Financial uses simple interest & applies excess to principal since this is what their website says they do and what their contract also stipulates. This is what I got from them back then and like I said, I can verify that it's being done correctly for my account without any need for calls...

Please note that once the interest accrued since the date of your last payment has been collected, any additional funds are applied to the principal balance of the account. This will appear on your statement as a credit towards your next payment because that is the only way we have of showing that amount to you on your statement. It is a limitation in information portrayal and not a misunderstanding in proper maintenance of your account.
If you continue to make extra/over payments, you will continue to see the 'Total Amount Due' decrease, but be assured that the overage amount is being applied to your principal balance.
Wow you got more details than I did. They actually explained to you why it looks like the extra payment applies to both principal and next month's payment (basically that their system can only do it that way). Thanks for sharing that.

They should have told me all this when I first called them months ago asking to apply my extra payment to my principal instead of next month's payment. Instead, they did something that actually reset the next month's payment to what it should be, and added a line to my payment history to explicitly show that the extra payment was going towards principal instead. So I never questioned it and assumed I needed to call every time. I even talked to a manager, to whom I had to explain why I wanted it that way, and at no point did she stop me and explain how they were calculating interest.

Since they use the simple interest calculation method, none of this hassle was needed. I should have known this and it is my fault for not reading the FAQ more carefully. But at the same time, the fact that nobody at HMF explained that, and the fact that they actually did something to my account that changed the amount due, gave me no reason to question it.

Now the only issue that remains is that my balance is wrong. I just made a payment, and, for this month, the calculation is right: the principal decreased by the correct amount. I'm going to put all that into my own spreadsheet to see which months were wrong and how much extra interest I was charged for those months.
 

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Yes the front line CSRs are clueless about this and have told others that they need to call every month but that's incorrect. I had to do a lot more digging to get to the bottom of things before signing my purchase agreement as I was not willing to use HFC if they didn't process things correctly as I pay 4 times the required monthly amount to have it paid off in 18 months. Like you I created amortization tables on my own to verify that the interest charged monthly is what it should be and on my end things are working as I would expect. This topic came up on the Palisade FB group and I tried to explain to the person complaining that but unless you have a good grasp of finance then it's hard for someone to follow along. You're the first person that has understood what I have posted and/or can verify how simple interest vs. predetermined interest work and how to figure out by looking at their online info.
 

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Discussion Starter · #9 ·
Yes the front line CSRs are clueless about this and have told others that they need to call every month but that's incorrect. I had to do a lot more digging to get to the bottom of things before signing my purchase agreement as I was not willing to use HFC if they didn't process things correctly as I pay 4 times the required monthly amount to have it paid off in 18 months. Like you I created amortization tables on my own to verify that the interest charged monthly is what it should be and on my end things are working as I would expect. This topic came up on the Palisade FB group and I tried to explain to the person complaining that but unless you have a good grasp of finance then it's hard for someone to follow along. You're the first person that has understood what I have posted and/or can verify how simple interest vs. predetermined interest work and how to figure out by looking at their online info.
Ah yeah, I'm aware that there is an active Palisade Facebook group, but I refuse to use Facebook, so I never joined.

Yup, I understand their calculations. It's actually pretty easy. I feel a little stupid for not noticing it in the FAQ sooner, but I don't feel too bad, since even an HMF manager was incapable of explaining it to me.

I still need to figure out the balance discrepancy. I wonder if my calling them (and whatever they did to the account the first 2 months to reset the next month's payment) is what screwed up the balance. I haven't had a chance to put their numbers into Excel yet - it's on my to-do list for this week-end.

Like you, I pay extra and I want to make sure it's done correctly. Thanks for your help.
 

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Discussion Starter · #10 ·
Update: they fixed my account at some point during the last few days. The balances and resulting interest calculations have been updated and are now correct. I've confirmed that by doing my own calculations in a spreadsheet.

I was not notified of the update, but I'll take it! Lesson learned: keep an eye on your balance.

They're still wrong about how many monthly payments I can theoretically skip due to having paid extra every month, but I'm just going to ignore that since we now know their system can't handle showing this correctly.
 

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This has absolutely nothing to do applying excess payments to principal but does show how difficult it is to deal with Hyundai Finance. I went online to take a look at my account. It requires you enter information like VIN and your birthdate. I enter the information but it says my birthdate is entered wrong. Well, I do know my birthdate, so I call customer service. They ask me my birthday and when I tell them what it is they tell me it's wrong. Then they say I will need to prove to them what they have is wrong. They will require a copy of my driver's license and birth certificate. I tell them that I don't just send copies of those documents to anyone. Their response is ask your dealer to send it. My reply is the same. Their response is I will not be able to log in then. Nice. Solution? Call back a couple of weeks later, go through the same process and build a little comaraderie. Then pick the right time to ask, what date do you show? Say thank you and hang up. They reversed the month and day. I used their wrong date to establish the online login.
 

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Discussion Starter · #12 ·
This has absolutely nothing to do applying excess payments to principal but does show how difficult it is to deal with Hyundai Finance. I went online to take a look at my account. It requires you enter information like VIN and your birthdate. I enter the information but it says my birthdate is entered wrong. Well, I do know my birthdate, so I call customer service. They ask me my birthday and when I tell them what it is they tell me it's wrong. Then they say I will need to prove to them what they have is wrong. They will require a copy of my driver's license and birth certificate. I tell them that I don't just send copies of those documents to anyone. Their response is ask your dealer to send it. My reply is the same. Their response is I will not be able to log in then. Nice. Solution? Call back a couple of weeks later, go through the same process and build a little comaraderie. Then pick the right time to ask, what date do you show? Say thank you and hang up. They reversed the month and day. I used their wrong date to establish the online login.
Glad you figured it out. But I can't blame them for asking you for proof. A date of birth is a piece of info that greatly facilitates stealing identities. It's a good thing they don't give that out over the phone (well, except for the operator who actually did give it to you).
 

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Glad you figured it out. But I can't blame them for asking you for proof. A date of birth is a piece of info that greatly facilitates stealing identities. It's a good thing they don't give that out over the phone (well, except for the operator who actually did give it to you).
Yes, I can't think of a better way to steal an identity than to send someone, you've never met and have no clue where they're at, a copy of your driver's license AND your birth certificate...
 

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Discussion Starter · #14 ·
Yes, I can't think of a better way to steal an identity than to send someone, you've never met and have no clue where they're at, a copy of your driver's license AND your birth certificate...
You realize they already have your license and social security number, right? But someone who knows your name could call them, pretend to be you and use the same story that happened to you to get your date of birth from them and steal your identity. That's why they wouldn't give it out.
 

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You realize they already have your license and social security number, right? But someone who knows your name could call them, pretend to be you and use the same story that happened to you to get your date of birth from them and steal your identity. That's why they wouldn't give it out.
Exactly, they ALREADY have my drivers license! Date is correct on that. Why ask for it again AND my birth certificate? Would you send them a copy of your birth certificate? Don't answer. You obviously fail to see the absurdity of this.
 

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Discussion Starter · #16 ·
Exactly, they ALREADY have my drivers license! Date is correct on that. Why ask for it again AND my birth certificate? Would you send them a copy of your birth certificate? Don't answer. You obviously fail to see the absurdity of this.
Calm down and re-read what I said. I didn't say that it was OK for them to ask for your birth certificate. I agree with you that they could have double-checked your DOB with your driver's license.

What I said is that I'm glad they didn't just provide you with your DOB over the phone. The DOB is a critical piece of information that can be used to steal identities. They absolutely should not have told you what they had on record over the phone.

You responded to my comment about the DOB that giving them your birth certificate was also a way to steal your identity. I responded that that's not really a risk, because they already have enough info about you to steal your identity if they wanted to, such as your driver's license.

I never claimed that it was OK for them to ask for your birth certificate. Just that it's not really a risk to provide it to them. And, as I said, I agree that they could have checked your DOB themselves by comparing to your driver's license. No argument from me here.
 

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I have been having issues with HMFUSA finaling my account after Vroom providing the payoff amount for my Santa Fe lease. It has been over a month and my account is still showing 38 days past due with money owed. I have spoke to probably a dozen reps and they all say its a glitch with their new system and the payment has to be manually applied by a special team.. im getting fed up with wasting my time calling over and over again. I wish there was a HMF corporate number to call or an email to complain. I have probably wasted 8-10 hours on the phone in the past month.
 

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Discussion Starter · #18 ·
I have been having issues with HMFUSA finaling my account after Vroom providing the payoff amount for my Santa Fe lease. It has been over a month and my account is still showing 38 days past due with money owed. I have spoke to probably a dozen reps and they all say its a glitch with their new system and the payment has to be manually applied by a special team.. im getting fed up with wasting my time calling over and over again. I wish there was a HMF corporate number to call or an email to complain. I have probably wasted 8-10 hours on the phone in the past month.
Yeah, that sounds familiar... What sucks is that the special team they're referring to might not be available due to COVID-19. I don't know what else to suggest besides continuing to call or contact them via their website. Make sure to escalate to a manager every time.
 
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