Loan protection
Benefits include:
- Payoff of remaining loan balance in the event of death.
- Monthly loan payments if a member becomes totally or continuously disabled.
- Eliminate financial hardship for family member in the event of death or disability.
- Payoff the deficiency balance on an auto loan in the event of a total loss on the vehicle.
Loan rates
Published loan rates can be deceiving
Published loan rates are often deceiving because they highlight low interest rates while burying high fees, points, and closing costs that significantly increase the total cost of borrowing. Advertised rates may also be "teaser" rates that adjust upwards later, or require a high credit score not available to most applicants.
Key ways published rates deceive consumers include:
APR vs. Interest Rate: The advertised rate often excludes fees. A higher Annual Percentage Rate (APR) includes both interest and fees, providing a more accurate total cost.
Hidden Fees and Points: Lenders may charge origination fees ranging from 2% to 10% of the loan amount, which are not reflected in the base interest rate.
Teaser and Adjustable Rates: Initial rates may be low but can spike over the life of the loan, leading to unmanageable payments.
Balloon Payments: Some loans feature low monthly payments but require a massive, often unaffordable, lump sum payment at the end.
Short-Term High-Cost Loans: Payday loans might show a small fee but actually equate to over 400% APR.
Over-Valued Property/Appraisal Inflation: In mortgages, inflated appraisals allow for excessive fees to be hidden in the loan.
To avoid falling for deceptive rates, borrowers should shop around, compare the APR rather than the interest rate, and look for reputable lenders.