Consumer complaint received 2024-02-09
Product: Vehicle loan or lease — Loan
Issue: Getting a loan or lease — Changes in terms mid-deal or after closing
Company: NAVY FEDERAL CREDIT UNION (TX)

Dear Sir/Madam, I am writing to bring to your attention a distressing situation involving unfair lending practices by Navy Federal Credit Union ( NFCU ). As a consumer, I feel compelled to report this matter to the appropriate regulatory authority in hopes of finding a resolution. 

In XXXX of XXXX, My husband and I, both XXXX XXXX, applied for a car loan from NFCU to purchase a new vehicle after being preapproved for another vehicle just days earlier. After discussing our options with an NFCU representative, we were advised that applying for a loan to purchase another new vehicle would be the best way to secure a higher loan amount. Relying on this guidance, we proceeded to apply for the loan to purchase a new vehicle. 

Initially, we were pre-approved for a {$60000.00} loan at an interest rate of XXXX XXXX. " We are a family of XXXX, relying on a single income to support our household. With XXXX children involved in traveling sports and one in XXXX, our financial responsibilities are substantial. Adding to our expenses, our auto insurance premiums are exceptionally high due to having XXXX XXXX  drivers and another soon to be licensed. Given our circumstances, we pay close attention to our finances and we meticulously plan. After careful consideration and calculation, we finalized our budget to ensure manageable monthly payments. We engaged in negotiations with the car dealer to secure the vehicle for precisely {$38000.00}, not a XXXX more, even though the approval was for much more. 



We secured a deal that would allow us to keep our payments within that predetermined range and the car happened to be used but still under factory warranty. However, upon discovering that we decided to purchase a used vehicle, NFCU increased the interest rate to XXXX XXXX despite our excellent XXXX scores and financial history. There was no explanation or justification for this sudden change in terms which we found unexpected and unacceptable since it placed our payments back into the payment range of a new vehicle. NFCUs used car rates for XXXX XXXX start at XXXX XXXX XXXX XXXX is a far cry from XXXX, resulting in over a {$100.00} per month increase and thousands over XXXX XXXX. If individuals with our income, credit history, and scores get rates this far from the starting rate, it raises questions about the veracity of the advertised rates and the potential for false advertising. 

To add insult to injury, I kept getting offers from XXXX XXXX and other sites to refinance my XXXX XXXX loan. I knew I didnt have this rate anywhere but I am concerned about why the sites were associating this rate with my loan. While the bank reports an interest rate of XXXX XXXX for XXXX XXXX on my {$38000.00} loan, their calculations suggest that I am actually paying XXXX XXXX, as indicated by these credit monitoring services like XXXX XXXX. This loan is showing on my credit with a balance of {$38000.00}. On NFCUs site, it is {$38000.00}, the original cost of the vehicle plus GAP insurance. These discrepancies are confusing and concerning. 



Both of these auto loans are reported as XXXX XXXX instead of the agreed-upon XXXX XXXX, which seemingly allowed for a higher interest rate. I understand that some lenders offer a grace period of 30-60 days before the first payment is due after the loan is processed, effectively extending the effective term of the loan. However, it's essential for lenders to accurately report the terms of the loan to avoid confusion and ensure transparency for consumers. I would appreciate clarification on why the loan term is reported as XXXX XXXX and confirmation that it aligns with the terms agreed upon in the loan agreement. It is especially disheartening to have this many unanswered questions when doing business with NFCU, an institution that explicitly targets its services to veterans and those affiliated with veterans. 



To add more context to our complaint, when I was approved for the loan before the one in question, I was given an interest rate of XXXX XXXX instead of the advertised lowest rate of XXXX XXXX for XXXX XXXX. When I inquired about it, the NFCU representative informed me that I was being penalized for not having all of my accounts with NFCU. This practice seems unjust and against the principles of fair lending especially since I cant find that rule in writing anywhere. I believe this action violates the Equal Credit Opportunity Act ( ECOA ), which prohibits creditors from discriminating against credit applicants based on factors such as not having all accounts with a particular creditor. Penalizing a borrower for not consolidating all accounts with NFCU is an unfair and discriminatory practice that should not be tolerated. 

I would like to also bring to your attention that there are numerous complaints similar to mine on the XXXX XXXX XXXX XXXX XXXX XXXX site and various social media platforms. It appears that these complaints have gone unanswered, potentially indicating a pattern of disregard for consumer concerns by NFCU. As a large entity with substantial resources, NFCU may feel insulated from the repercussions of dissatisfied consumers. This raises serious questions about the effectiveness of existing mechanisms in holding such entities accountable. It is troubling that these complaints appear to have gone unanswered, suggesting a lack of accountability and responsiveness on the part of NFCU. 

Attempts to address this issue with NFCU have proven futile, marked by resistance and apathy. Their responses were blatant and dismissive. Despite our persistent inquiries and discussions with managers, we have been met with a steadfast refusal to provide a satisfactory explanation for the substantial hike in the interest rate and quick retorts that the rate would not be changed. It is frustrating that the only answers given about the used car loan 's unfavorable rate were the credit history of either borrower ( both of our histories are completely green ) or credit score ( both were in the upper XXXX or lower XXXX and have been for years ). When I contested this information, no one could give a clear answer for the sizeable change except that the underwriters have their own reasons. Such information should be easily accessible to consumers. The lack of transparency from NFCU has been glaring, with vague and unsatisfactory responses such as " Thats not my area '' or " Im not sure what information they use. '' This evasiveness leaves consumers feeling frustrated and powerless, as pertinent information seems to reside solely in the minds of NFCU personnel, rather than being accessible in writing or comprehensible to us as consumers. 



During the first 30 days of the loan period, I contacted NFCU multiple times to discuss returning the car, as I was uncomfortable with various aspects of the agreement. However, NFCU refused to accept the car back, stating that they are not a dealership and could not facilitate the return. When I inquired about voluntary repossession, NFCU recommended against it, stating that it would negatively affect my credit. I felt trapped between a rock and a hard place, with NFCU holding all the cards and refusing to provide any reasonable solutions. NFCU 's response to my efforts to relinquish the vehicle was inadequate and nonsensical. They recommended that I return the vehicle to the dealership, despite the fact that the dealership had already been paid and the vehicle 's value had already depreciated since the time of purchase. This suggestion offered no practical solution and further compounded the frustration and distress caused by NFCU 's unfair treatment. 





As victims of identity theft in the past, we understand the importance of safeguarding our financial well-being. It took almost 15 years to overcome the consequences of identity theft, including a short sale of our home and freezes on our taxes. We can not afford to be in that situation again. As XXXX XXXX  consumers, we are keenly aware of the systemic disparities we encounter in the financial landscape, and as XXXX XXXX, we are particularly attuned to the predatory tactics targeted at our community. Prior to our interactions with NFCU, we prudently steered clear of unnecessary debt, opting to purchase vehicles outright with cash for many years. We entered into this transaction with the expectation of a seamless process, having meticulously attended to every detail. Instead, our confidence in NFCU as a reputable financial institution has been shattered by their deceitful practices. It is evident that NFCU 's actions are not only unjust but also lacking in basic regard for consumers, their rights, or fair treatment. It is profoundly disheartening to realize that despite our meticulous efforts, we have fallen victim to the unjust lending practices for which NFCU has gained notoriety, including its involvement in class action lawsuits related to disparities and deceptive debt collection practices. Now, we are forced to take a hit to our credit because we need to refinance with a different lender to avoid being deceived again. It's unfair that our credit, which is our resume to lenders, is tarnished by a major organizations deceptive practices, leaving us with limited options and additional financial hardship. 





The credit union is aware that we did not sign or agree to the terms outlined in the promissory note. Despite this, they sent a letter asserting that by signing the promissory note, we have implicitly accepted the potential imposition of a statutory lien on our share accounts. This assertion is troubling, particularly considering the previously discussed loan where we were not offered a lower interest rate on a previous car purchase, allegedly due to our lack of share accounts with NFCU. Meanwhile, NFCU has also sent correspondence implying that failure to sign the promissory note may result in adverse consequences, including the potential loss of the vehicle. However, according to legal principles, both parties must agree to the terms of a promissory note for the deal to be valid. As of now, we have refrained from making any payments on the vehicle, bringing us perilously close to the 30-day late mark, which could adversely impact our credit score. We are faced with a dilemma : whether to acquiesce and pay, seemingly agreeing to terms under duress, or to withhold payment in protest, risking credit damage and accruing late fees.

Within this letter, I believe I have listed violations of several consumer protection laws, both at the federal and state levels. In Texas, consumers are protected by various statutes and regulations aimed at preventing deceptive practices and ensuring fair treatment in lending transactions. The Texas Finance Code, for instance, contains provisions that prohibit unfair or deceptive acts or practices by lenders. The Truth in Lending Act ( TILA ) requires lenders to disclose all terms and conditions of a loan, including the annual percentage rate ( APR ), in a clear and transparent manner. Additionally, the Equal Credit Opportunity Act ( ECOA ) prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, or because an individual receives income from a public assistance program. Moreover, as veterans, my husband and I are entitled to specific protections under federal law, including the Servicemembers Civil Relief Act ( SCRA ), which prohibits discriminatory and unfair treatment of veterans in financial transactions. It's essential for lenders to adhere to these laws and ensure that consumers, especially veterans, are treated fairly and afforded the protections they deserve.

I am doing my part as a citizen and acting as an important prong in the American constitutional concept of checks and balances by reporting this, as consumers often find themselves weary and exhausted by feeling small in administrative predicaments with big companies that lord over them with long money and better lawyers at their disposal. I hope that my efforts are not in vain.

In light of these circumstances, I urge the Consumer Financial Protection Bureau to investigate this matter thoroughly and take appropriate action to hold NFCU accountable. Additionally, I would appreciate any guidance or assistance you can provide in resolving this issue and protecting consumers from similar experiences in the future. 

Thank you for your attention to this matter.