Please help me understand loans...

my ex-bf has his car payment direct drafted (for future this will be d.d.) out of his bank account because he is horrible at remembering to pay ontime.
The loan company has called him this year 15 times telling him they are repossessing the car for failure to pay. He used to explain the d.d. and they were appeased. Then he got mad when they called his boss during work about it and he cursed at them and explained the d.d. again (this was last week). Tonight they did they called again and he got the manager on the phone who said that he is missing Apr-Jun payments and its his (xbf) responisibility to make sure they are drafted.

Anyone had experience with this before? And although he has bank statements to verify payments how does he keep them from showing missed payments? Will this affect his credit?
I advised him to consult a lawyer-esp. if it will wrongly affect the credit.

I would have him write a letter to the loan company outlining the terms of the direct draft (on which day for what amount from what account number, etc.) and send it return receipt, signature requested ... make sure he keeps a dated copy of the post office receipt AND a print out of the post office's tracking/delivery information. Make 100% absolutely certain the money is in the account and available for this draft on the date specified. When/If the loan company calls again, say politely, "You have the authority to draft the loan payment out of my account every month on (whatever) day. If you do not have the payment, then you did not take the draft and you have not met the terms of our agreement which means YOU are in default of the loan. I will have my attorney call you to make arrangements for the title to be released immediately." Then ask to speak to a supervisor at once. Be prepared to fax a copy of the letter sent to the loan company to them and stand your ground. If he is in the right and they send an adverse report to the credit bureaus, then get a copy of the credit report and dispute the report.

Originally Posted by gayef

I would have him write a letter to the loan company outlining the terms of the direct draft (on which day for what amount from what account number, etc.) and send it return receipt, signature requested ... make sure he keeps a dated copy of the post office receipt AND a print out of the post office's tracking/delivery information. Make 100% absolutely certain the money is in the account and available for this draft on the date specified. When/If the loan company calls again, say politely, "You have the authority to draft the loan payment out of my account every month on (whatever) day. If you do not have the payment, then you did not take the draft and you have not met the terms of our agreement which means YOU are in default of the loan. I will have my attorney call you to make arrangements for the title to be released immediately." Then ask to speak to a supervisor at once. Be prepared to fax a copy of the letter sent to the loan company to them and stand your ground. If he is in the right and they send an adverse report to the credit bureaus, then get a copy of the credit report and dispute the report.

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Gayef sounds much more knowledgable than I do, so go by what she's saying..but I also was thinking about what day they are trying to take the payment out. For example, if they want the payment on the 1st of each month, and you ex's pay doesn't go in until the 3rd...then he already missed a payment. That is already 1 NSF (Non-sufficient funds) charge that the bank has to charge his account (can be up to $50 depending on the bank), so that money is gone once the dd hits his account. They may try again a few days later, but if the charge takes more than what is due for that payment, there is another NSF charge...after that it is an evil cycle and very hard to get out of (been there, done that).

We used to have a lot of payments taken from dd but have learned that dd isn't always reliable. It's easier if someone gets paid twice a week (1st and 15th) as apposed to bi-weekly. That is were some of the problems came in with us. Also, it doesn't help if the payroll department suddenly has a brain freeze (that has happened also). We find it easier to just write the checks and drop them off at the bank, rather than trust the computer systems to be on track. If we are a few days late, we have a grace period but with taking it automatically from the account, once there is one NSF charge that is money that didn't need to be spent.

This is great advice! I will pass this along to him. I told him he should just ask for a paper bill to be mailed but he said the loan gave him a discount if he did d.d. so he wasn't sure how that would mess him up.
Thanks for such a quick response!!

When I worked at a major captive auto finance company we had many customers payments taken from their checking account or some savings account.
There was a form that the customer had to complete with the customers bank account number and routing number of the financial institution. The payment then came out of the customer's bank account the day it was due as requested on the finance contract.
Rarely did we have a problem from the banking data the customer provided.
If his payments for instance are due on the 15th of the month they are pulled from his account and applied that date.
Does his bank statements reflect that the payments are being taken from his bank account? My cellphone bill for example is automatically taken from my bank account and are reflected on my monthly bank statement.
If his bank statement shows they are being taken then there is a problem between the bank and the loan company. The funds should be sitting in some sort of suspense account as the finance company isn't getting them applied to the correct loan. We had a report that informed us of any problems and had to correct it for the customer.
Did his bank perhaps change their routing number?
If the money isn't coming out of his account he needs to correct this right away.
I remember our system would only apply payments if the customer was current on his account so say for instance you had always written a check but wanted the EfT (thats what its called Electronic Funds transaction) your loan would have to be paid current for the system to work properly.
Let me know if I can provide any more info!!

Thank you very much! His statements do reflect the money being taken out. That's why he is getting angry with the constant phone calls. I guess he's going to call his bank in the morning to see if it is a problem with them. We can't figure it out...

If the statements reflect that the payments are being taken out it seems like a problem with the loan company. Either its getting misapplied to another account or they should have it in some type of account waiting to find out where to apply it. Perhaps you can find out if they have some sort of daily reports that would show this??