“I’ve always had insurance on this car.”
A woman says her credit union charged her $150 a month for insurance on her car because it thought she had none. But she says the car has been insured since she got it in 2022. She only found the charge after a merger with another credit union moved her loan onto a new app, and by then it had added up to almost $3,000.
Rae (@koldfront234), who manages a McDonald’s, recently posted a video about how she found out about the $150 charge. “Not thoroughly checking my car statements almost cost me $3,000,” she begins.
“The credit union my car loan is through has been adding $150 back onto my principal every month because they didn’t think I had insurance on my car,” she says. Because it happened after each payment, the $500 she paid never changed, but her balance barely moved. She says she called the credit union to ask why her principal “hasn’t went down much at all in like years,” and was told “everything looks correct on our end.”
Then her credit union “got bought out by a bigger credit union,” and its new app showed more detailed pay statements. She spotted a recurring $150 entry marked CPI, looked it up, and learned it meant the lender thought her car was uninsured.
“Mind you, I got this car in 2022. It’s 2026. I’ve always had insurance on this car,” Rae says. She has changed insurers once, and that switch “doesn’t even line up to the time that they’re saying I ended up not having insurance anymore.”
So far it has been viewed more than 18,500 times.
‘You Guys Have My Phone Number’
She had called the credit union about her loan before, she says, and nobody mentioned it. “They said they tried to mail me one time about my insurance. I never got the mail. And you guys have my phone number and my email,” she says. “So it’s like, why would you not try every avenue?”
She says the credit union is now “paying back the 3,000 plus interest on it back to my principal.” The money hadn’t posted by Oct. 8, when she shared an email from the credit union in the comments. It said, “The refund was verified but we are waiting for the funds to post to our GL account.”
She hasn’t named the credit union.
What Is Collateral Protection Insurance?
CPI is collateral protection insurance. Car loans generally require comprehensive and collision coverage, and when a lender’s records suggest it has lapsed, some contracts let the lender buy a policy and add the cost to the borrower’s account, according to a 2021 Consumer Financial Protection Bureau (CFPB) report on auto loan servicers. Those policies “only cover damage to the vehicle,” the CFPB said, so the $150 a month would not have covered Rae’s liability in a crash, which lelarose64 asked about.
Servicers usually send a notice asking for proof of insurance first, the report said. But examiners found that some had unfairly charged for CPI “when consumers had adequate insurance in place,” partly because they “sent notices regarding CPI charges to inaccurate addresses” and failed to process the proof borrowers sent in. It also counted it as further harm when servicers “applied any refunds of paid CPI charges to principal instead of returning those amounts directly to the consumer.”
In a 2018 consent order with Wells Fargo, the CFPB said the bank had placed insurance on the vehicles of about 2 million auto borrowers since 2005, and that its own analyses showed “duplicative or unnecessary insurance on hundreds of thousands” of them. Roughly 28% of the policies were canceled because the borrower had been insured for the whole term. Wells Fargo’s vendor was required to send written notices and “attempt to call the borrower” before buying one.
‘We Gain Nothing From Adding CPI’
Commenters who said they work in lending said that oftentimes their hands are tied. mrs.jesslopez, who said she works as a loan processor at a credit union, wrote, “CPI is handled through a third party. They only mail items (multiple times). They do not email or call.” She added, “We pay for CPI to do its thing. We aren’t trying to get you. We gain nothing from adding CPI.” melojune18 described a different approach: “I work our insurance list and I call, text, and email our members.”
Others had been through the same issue. “Happened to me too! Provided proof that I never went without insurance, they promised to remove it and refund. Never did,” wrote tacruz70. kathrynwells2604 wrote that her lender “added $2,600 for the year. When I sent them the declaration page they said they couldn’t refund it.”
1993tjlj argued that nothing was being added to her principal, and that her payments were covering the insurance first. Rae answered that her statements showed the balance dropping after each payment and climbing again when the CPI was added: “That’s adding it to my principal, no?”
One commenter told her to report it to the CFPB, which has authority over credit unions with more than $10 billion in assets. Members of smaller ones can complain to the National Credit Union Administration’s Consumer Assistance Center, which passes complaints outside its remit to the right federal or state regulator.
Rae wrote that she’s “really not even trying to do the blame game, more just making people aware.”
Her advice: “Just watch out for anything on your statements.”
Motor1 reached out to Rae via email for comment. We’ll be sure to update this if she responds.
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