I had an interest only auto loan. Each month I paid more than the interest due thinking that I was paying on the principle. I did this for two years and when the loan came due,I found out the bank had not applied extra amount to principle but to future interest. Is there any recourse? They refuse to apply extra money to principle.

Ask for an accounting, since if you keep paying future interest, did you not over pay interest at some point ?

Did you send extra money in on different check, did you mark how you wanted the money to be applied.

When you got your monthly statements did you not see that no money was being applied to principal.

You may sue them but have to prove they violated some part of the loan.