Consumer complaint received 2020-12-31
Company: Upstart Holdings, Inc.
State: VA
Product: Payday loan, title loan, or personal loan
Sub-product: Installment loan
Issue: Problem when making payments

Complaint:
I secured a loan with Upstart.com for {$24000.00} on XX/XX/2019 ( Origination Date ). My issue with the lender resides with deceptive handling of prepayments. In short, rather than apply prepayments against outstanding principal, the lender is applying prepayments against the next period 's installment. 

This conflicts with the terms of the promissary note that I signed with the lender. The relevant section is as follows : " Prepayments ; Partial Payments ; Forbearance. I may prepay this Note in full or in part at any time without penalty. Any partial prepayment is to be applied against outstanding principal and does not postpone the due date of any subsequent monthly installments, unless you otherwise agree in writing. If I prepay this Note in part, I agree to continue to make regularly scheduled payments until all amounts due under this Note are paid. Further, I understand I may request forbearance in accordance with your reasonable procedures and requirements, and the decision to grant my request for forbearance shall be solely at your discretion. During any period of forbearance, my regularly scheduled payments of principal and interest on my loan may be deferred to the extent permitted by applicable law. Except as described above, I understand that I will remain responsible for all interest accruing during any period of forbearance. I understand that any periods of forbearance may increase my monthly payments during my loan term or, in limited cases, may extend my repayment period unless prohibited by applicable law. '' My monthly installment is {$500.00} with monthly payments due on the anniversary of the origination date ( the XXXX of each month ). I recently began making payments of {$750.00} with the intention of applying the extra of {$240.00} to the outstanding principal. 

Instead, I was told that my payment ( which was inititated on XX/XX/XXXX but would post on XX/XX/XXXX ) would be applied against my XX/XX/XXXX and XX/XX/XXXX installments. I spoke with a company representative and was told that by selecting XX/XX/XXXX as my payment date, my payment would be posted in the next billing period, thus leading to it being considered a standard installment and not a prepayment. I was further told that in order for extra amounts to be applied against principal, I would need to change the payment date to occur at least 1 day prior to the agreed upon installment date. 

I find the company 's explanation dubious. The automatic recurring payment feature on the Upstart portal is set to default to the origination anniversary date as the payment date. The default amount that is prepopulated is the standard installment amount. Users have the ability to change both the date and amount of payments. I changed the amount to {$750.00} thinking that the extra would be applied against principal. There is nothing on their website, in the promissory note or elsewhere that indicates I need change the installment date to be 1 day early in order to facilitate a prepayment.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation