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Here's a really great option offered by US Bank on a car loan:

March 9, 2003
CSL 006
By Invitation only -
Skip your next loan payment!

FIRST LAST Account Number: 9999-9999-999-999
CITY, ST 99999-9999 Motor Vehicle Loan

Since you've established an excellent payment record on your U. S. Bank® loan, you're eligible to skip one of your monthly payments. As one of our most valued customers, this program has been designed especially for you.

Skip a payment now and lower your monthly expenses!

With the U. S. Bank Skip Payment program, you have the option to skip your next loan payment and use the extra cash to help pay your taxes, make home repairs, or anything else you need. A $50 processing fee will be automatically added to the principal balance of your loan.

It's so easy to do...

It's simple to take advantage of this special offer. Let us know at least 15 days before your loan payment is due that you want to skip your payment and we'll take care of the rest.

Here's all you need to do:

  1. Sign and return the attached certificate in the enclosed postage-paid envelope.
  2. Return the certificate 15 days prior to your regular loan payment date.
  3. This offer is valid through May 31, 2003.

That's all there is to it! This is just our way of saying thank you for being a valued customer. We appreciate your business. If you have any questions please call U.S. Bank 24-Hour Banking and Financial Sales at 1-800-USBANKS (1-800-872-2657). For TDD access, call 1-800-685-5065.

Sincerely,
/s/
Trent Spurgeon
Vice President


Account Number: 9999-9999-999-999
Motor Vehicle Loan
Offer expires May 31, 2003

Skip Payment Certificate

  You agree with the Terms and Conditions on the reverse side of this letter. This certificate must be received at least 15 days prior to your regular payment due date. The processing fee will be automatically added to the principal balance of your loan.


The following is from the reverse of the offer. It's in faint type... looks like they're trying to hide it to me. I would understand why they might want to do that.

Skipping a payment on your loan may affect your APR and the total interest paid. For example, on a 120 month $25,000 loan with a current APR of 10%, your monthly payment would be $330.38. If you skip the 28th payment, interest will continue to accrue on your loan and your maturity date will be extended one month. As a result, your effective APR will be 10.11% and the amount of your final payment would be $399.05.

An APR of 10.11%? Perhaps on the whole loan, but in the example given, the $50 charge applies to borrowing $330.38 for 92 months. They're implying that you can borrow $330.38, plus the $50 payment, for over 7 years at 10% interest and pay only $68.67 interest. That doesn't add up!

The extra payment due at the end would be closer to $816.47, and your APR on the skipped payment would be somewhere around 12%. For their numbers to make sense, they have to raise the monthly payment to $335.86. You'd be paying an extra $5.48 for 91 months and that extra $68.67 on the last month, for a total of $567.35.... and you still pay the original $330.38, just 92 months later.

Terms and Conditions

  1. This offer entitles borrowers in good standing during 2003 to skip one month's loan payment. Skip Payment requests will not be accepted if the account is past due or closed.
  2. All other terms and conditions of the loan, including the note rate and collateral security for the loan, will remain in full force and effect.
  3. Skipping a payment will delay the scheduled reduction of the principal balance on your loan and as a result will increase the total finance charge on your loan. The maturity date of your loan will be moved back one month.
  4. Your final payment will equal the amount of the skipped payment plus accrused interest and fees (if applicable).
  5. We will skip the first possible payment depending on when you mail your Skip Pay certificate as long as it's received 15 days prior to your regular payment due date and the offer expiration date.
  6. Skipping a payment may require the bank to complete a new flood determination on your property in order to comply with the Flood Disaster Protection Act. If your property is in a flood hazard area, adequate flood insurance will be required. (Applicable only to home equity loans.)

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