Short answer: loans are bought and sold, and the company that collects your payments, the servicer, can change. Before you send money anywhere new, confirm the change with the company you pay now, using contact details from your own statement or loan papers, not from the letter. The FTC's advice for unexpected messages is the same: verify using a phone number, website or email address you know is real (FTC). Then move your payments carefully so none is missed.
Lender, owner and servicer
Your lender is the company that lent you the money. Your servicer manages the loan, including collecting your monthly payments; many lenders service their own loans, but some use another company (CFPB). A loan can be sold to a new owner without the servicer changing, and the servicer can change without the loan being sold (CFPB). Your statement should show the company to contact (CFPB).
Check the letter before you pay
- Call the company on your most recent statement or your loan papers and ask whether the loan or its servicing really moved, to whom, and from what date.
- Do not use the phone number, link or email in the letter to check it (FTC).
- Never send money by wire, cryptocurrency or gift card because of an unexpected message (FTC).
- Be wary of a letter that says you must pay a fee to keep the loan, or that offers a better deal if you act now; see advance fee loan scams.
What should stay the same
Your loan contract sets your rate, payment, due date and fees. A notice telling you where to pay is not a new contract. Compare the first statement from the new company with your last one from the old company:
- The balance, allowing for the payments you made in between.
- The interest rate and the payment amount.
- The due date and the number of payments left.
- Any autopay discount or other feature you had; ask whether it carries over.
If anything changed and no one can show you the part of your contract that allows it, ask for an explanation in writing.
Do not miss a payment in the switch
- Find out the last date the old company will accept payments and the first date the new one will.
- If you pay by automatic debit from the old company, ask whether it stops and set up the new one before the next due date. If you use your bank's bill pay, change the payee. How to stop an old debit is in how to stop automatic loan payments.
- If a payment was already on its way to the old company, ask both companies to confirm it was credited, and keep proof of the date you paid.
- If a payment lands in the wrong place and a late fee or late report follows, dispute it; see disputing a loan reporting error.
Mortgage-only notice rules
The federal transfer notice rules below are written for mortgages; they do not cover personal loans. A company that buys a mortgage loan generally must send a notice within 30 days of the transfer (12 CFR 1026.39), and old and new mortgage servicers generally must notify you of a servicing transfer about 15 days before and after it (CFPB). For 60 days after a mortgage servicing transfer, a payment the old servicer receives on time may not be treated as late (12 CFR 1024.33(c)). For a personal loan, your contract and the companies involved decide how you are told, so confirm everything directly.
If a company will not answer, or you think you were treated unfairly, see how to file a loan complaint.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- CFPB: How do I know who my auto loan lender or servicer is?
- CFPB: What happens if my mortgage is sold? Is my loan safe?
- CFPB: What happens if the company that I send my mortgage payments to changes?
- Regulation Z, 12 CFR 1026.39: mortgage transfer disclosures (new owner of a mortgage loan)
- Regulation X (RESPA), 12 CFR 1024.33: mortgage servicing transfers
- FTC: Imposter Scams