Things To Watch For
There are a number of things that savvy consumers should watch for. A number of these are listed in the material below.
Many mortgage agreements provide for low interest rates. However, these those interest rates may no longer apply if you pay off the loan too soon. The
creditor wants to earn as much money from you as possible. These earnings are usually in the form of late fees, penalties, and interest. As a result, some
contracts provide that if you pay the debt off early you must pay a large penalty that may equal or exceed the amount of interest you would pay over the full
term of the note.
Car Title Loans
While there are many reputable lending institutions, there are a number of unscrupulous companies who lend money against your car title. Some of these
companies, will actually require you to give them the vehicle when they tell you that they are only requesting a security interest in the car. Then if you default on
the loan, the car belongs to the lender. Some of these lenders after taking possession of the car will then sue you for the amount of the debt. This is illegal, but
happens far too often because consumers are not sophisticated enough to object.
High Interest Rates
You should check carefully the interest rate and the interest you will expect to pay over the term of your loan. Some creditors, including many post dated
check loan institutions, charge interest in excess of 500 percent. This means that if you borrow $200, over a one year period you would pay $1,000 in interest.
While vehicle leases sound great, they have some serious down sides. Many times, your monthly payment is the same as a monthly payment to purchase the
same vehicle. However, at the end of your lease, you do not own the vehicle, but must buy it from the creditor if you wish to keep it. Second, most leases
have early cancellation penalties. If you decide you do not like the vehicle you may have to pay almost as much or more to give the vehicle back than if you
had kept it and made the regular monthly payments. Finally, most vehicle leases have milage and damage clauses. This means that if you drive the vehicle
more than a set number of miles or there is more than a certain amount of wear and tear on the vehicle, you are required to pay a penalty when you give the
vehicle back. This can be quite substantial. If you don't believe that vehicle leases are complicated, simply try to read the fine print sometime. Or better yet,
as the salesman to explain it to you in real numbers.
Taking A Vehicle Out Of State
Most vehicle purchase contracts have a provision that makes it illegal to remove the vehicle from the state where you purchased it. As a result, if you are
planning to move in the near future, you should carefully check the contract provisions. Otherwise, you may be required to give the vehicle back and pay a
large deficiency when the vehicle is sold by the bank. Some banks, will amend the document and give you permission to move. However, that permission
must be in writing. Otherwise, the bank doesn't have to keep its promise.
"Agree With Thine Adversary Early"
When many people get into trouble on a contract or agreement, they think that if they ignore the problem it will be minimized or go away. Unfortunately that is
not the case. If you are in trouble, it is important that you try to resolve the problem as quickly as possible. If not, you may find yourself not only paying back
the original debt, but penalty amounts, accruing interest, court costs including filing and service fees, and attorney's fees. In my personal experience I have seen
debts under a $150 become debts in excessive of $1,000.