Consumer complaint received 2025-06-20 00:00:00
Product: Payday loan, title loan, personal loan, or advance loan — Installment loan
Issue: Problem with the payoff process at the end of the loan — 
Company: Upstart Holdings, Inc.
State: AR

Complaint narrative:
On XX/XX/year>, I submitted a full payoff payment of {$4900.00} toward my personal loan with Upstart. This amount was the exact payoff quote provided by their system when I accessed my loan dashboard. The language on their website indicated that the quoted payoff amount included all outstanding principal and interest due through the selected payoff date. At no point was I advised that I needed to cancel automatic payments or that the quoted amount would be reduced by additional accrued interest before being applied to principal. 

After submitting the payment, my account reflected a {$0.00} balance, and I received no communication indicating that any amount remained due. I reasonably understood this to mean that my loan had been fully satisfied and that no further payments would be required. 

However, on XX/XX/year>, an automatic payment of {$160.00} was withdrawn from my account. I contacted Upstart and was told that this payment had been anticipated and built into the original payoff quote. This claim was never disclosed in the quote itself, nor was it supported by any of the loan documents or policies I reviewed after the fact, including the Truth in Lending Disclosure, Promissory Note, Terms of Use, and E-Sign Consent Agreement. 

Further complicating matters, Upstart later informed me that both the {$4900.00} and the {$160.00} were necessary to fully pay off the loan. Yet at the same time, they stated I was owed a refund of {$10.00}, which directly contradicts the claim that both payments were necessary. If both were required, no overpayment would exist. The acknowledged overpayment proves that the XX/XX/XXXX payment was not necessary and was taken in error. 

After analyzing my loan transaction history, I identified the actual cause of the discrepancy. Of the {$4900.00} payment made on XX/XX/XXXX, only {$4800.00} was applied to principal with {$100.00} applied to interest. This left {$100.00} in unpaid principal, which was covered by the XX/XX/XXXX automatic withdrawal. That second payment was then applied {$140.00} to principal and {$0.00} to interest. This means the loan was not paid off as quoted, not because of any failure on my part, but because interest was applied first in a way that was never disclosed. 

Section XXXX of the Upstart Promissory Note clearly states : " I XXXX prepay this Note in full or in part at any time without penalty. I agree that you will refund to me any unearned finance charge as required by applicable law. '' " Any partial prepayment is to be applied against outstanding principal 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. '' Nowhere does this language authorize Upstart to deduct newly accrued interest from the quoted payoff amount before applying it to principal, nor does it state that borrowers must cancel autopay after making a full payoff. I specifically requested supporting documentation for these claims from Upstart, and none has been provided. 

To resolve this, I : Emailed Upstart several times between XXXX XXXX XXXX Called their support line twice on XX/XX/XXXX and was told a supervisor would return my call. No supervisor ever followed up. 

Was only offered a refund of {$160.00} on the condition that my loan would no longer be considered paid in full. 

Because Upstart has failed to justify its actions, failed to disclose critical information, and failed to resolve the matter through normal customer service channels, I am filing this formal complaint. 

I am requesting : A full refund of {$160.00} for the unnecessary payment processed after my loan was shown as paid in full. 

A full refund of {$100.00} in interest that was improperly deducted from my payoff amount. 

Written confirmation that my loan continues to be reported as fully paid and satisfied as of XX/XX/year>. 

A clear explanation and official documentation of how payoff quotes are calculated to prevent future consumer confusion. 

I have preserved all relevant documentation, including payment records, communications, and screenshots showing the account balance and payoff quote. Upstarts mishandling of this case has led to unauthorized withdrawal of funds and a failure to meet fair financial disclosure obligations. 

I respectfully ask that this matter be investigated and resolved appropriately.

Company response to consumer: Closed with explanation