Consumer complaint received 2020-09-30
Company: NAVY FEDERAL CREDIT UNION
State: NC
Product: Vehicle loan or lease
Sub-product: Loan
Issue: Problems at the end of the loan or lease
Sub-issue: Problem while selling or giving up the vehicle

Complaint:
Re : Navy Federal Credit Union XXXX XXXX XXXX XXXX, VA XXXX This serves as a written complaint regarding the vehicle financing and trade in policy of Navy Federal Credit Union ( " policy '' ). 
The trade in policy is needlessly complex both for the consumer as well as for the car dealerships where the consumer may purchase the vehicle from. This complexity causes confusion, stress and has financial consequences for the consumer.

Navy Federal ( " NFCU '' ) requires that the car dealership accepts the trade in vehicle free and clear and to subtract the amount of the trade in allowance from the loan check. It is the policy of Navy Federal to close out the existing loan on the trade in vehicle and then to roll that balance over to the new loan. The new balance will contain the previous loan balance as well as the new vehicle loan balance less the trade in allowance. Navy Federal will reject any payment that the car dealership makes to them for the trade in and will return all checks to the dealership without notification. At best, this policy is both unconventional and contrary to industry best practices. At worst, this may be a duplicitous attempt to force the consumer to pay more interest while any issues arising from this confusing policy is resolved between NFCU, the dealer, and the consumer. 

This forces the dealership to essentially turn what is a straight forward transaction into an overly complex one. Rather than accepting payment for the vehicle that the dealer just sold for the fair market value as well as sending in a separate check to Navy Federal for the vehicle trade in that the dealer has agreed to buy from the consumer which is a simple one to one transaction, in Navy Federal 's policy, the dealership has to accept a loan check payment which is far far less than the fair market value of the car they are selling to the consumer. 

On XX/XX/2020, I traded in my XXXX XXXX valued at XXXX for a XXXX XXXX valued at XXXX. The car dealership was XXXX XXXX XXXX. The subtotal is XXXX. The existing NFCU Loan for the XXXX XXXX is XXXX. After admin and taxes, the final selling price is XXXX. When the XXXX manager called the NFCU loan hotline listed on the loan check, he informed Navy Federal that he will write the check for XXXX. The Navy Federal associate asked what the trade in was valued at, the manager confirmed XXXX. The NFCU associate proceeded to give the manager the approval code to cash the check. The NFCU associate did not attempt to educate the manager on the policy referenced above. The NFCU Associate did not instruct the manager to  subtract the trade-in allowance from the final selling price. This lack of communication from the NFCU associate directly resulted in my new loan balance being XXXX. Which is the XXXX in addition to the previous loan on the XXXX XXXX. This resulted in higher loan payments, more interest accrued as well as a larger negative impact to my credit score.

When I realized what had happened, I called Navy Federal. Several associates confirmed on the recorded phone line that despite the miscommunication with the dealer, NFCU would accept any checks that the dealer will send in separately for the XXXX XXXX trade-in. They confirmed on the recorded phone line that NFCU 's back office would know to put two and two together, as simple logic and common sense would dictate. 

On XX/XX/2020, I called NFCU to inquire if they have received the dealer 's check. The associate confirmed they did receivethe check from XXXX but that they had rejected the check and sent it back to the dealer. The check XXXX sent to NFCU was XXXX. I escalated to NFCU Manager XXXX as to why this was the case. XXXX confirmed that when NFCU 's back office received the check, the check referenced the previous loan balance. Since the previous loan balance was rolled into the new loan, the back office did not accept the check. This is completely contrary to my previous conversation with multiple NFCU associates that promised that NFCU would accept the dealer 's check for the trade-in. XXXX informed me to speak to XXXX and have them reissue the check for the new loan. NFCU did not attempt to contact the dealership to clarify the issue, nor did they attempt to contact me, even though I maintain several NFCU accounts and they have a record of all of my calls with their associates regarding this matter. They also have my current contact information. This lack of care and consideration for their customer is shameful. 

I called XXXX afterwards and they were just as confused as I. Consequently I have to pay far more interest for a new car ( that is only valued at XXXX ) because NFCU 's overly complex trade-in policy has caused me to carry a loan balance approximately 33 pct more than what the XXXX XXXX ( XXXX vs XXXX ) is worth. 

I am seeking 1. that NFCU assigns a dedicated case officer to be the direct liaison between XXXX and NFCU and myself. This case officer should work with XXXX expeditiously to ensure that the dealer 's check is accepted, processed, and applied to my new loan balance, thereby restoring the balance to the original intended amount ( XXXX ). This case officer should proactively track the movement of the check as well as all associate back office functions at NFCU to get this corrected. This case officer will readily furnish his direct work number to facilitate all communication between the parties involved. 
2. that NFCU cancels and reimburses me for the excess interest the loan is accruing.

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