Money world

Loan Payment Protection Insurance Worth The Cost

Loan Payment Protection Insurance – Worth The Cost?

Nowadays, every time you apply for a loan you will most likely be offered payment protection insurance. If you are taking out a particularly large loan, the idea may seem very attractive. These insurance policies will take over repayments on your loans in the event of losing your job or being involved in a medical emergency. But what are the true costs and benefits of this type of? Given that over a billion pounds is spent in Britain on this kind of insurance annually, it is worth asking yourself.

The Cost Of Insurance

The fact of the matter is that the lending industry has become more and more competitive in recent years. With interest rates getting lower and lower, lenders have sought to find out ways of increasing their returns. One of the ways they have come up with is to offer various additional products that accompany the loan, such as payment protection insurance. What may come as a surprise is that payment protection can often cost as much as the loan interest repayments. The payment protection repayments can, incredibly, effectively double the cost of the loan. With such startling consequences, it is imperative that consumers think carefully before opting for such options.

Peace of Mind?

Many people will hold the view that as lives and jobs become more and more unstable, the peace of mind offered by such policies are worth the price. In some cases this is true, but not always. Every insurance policy varies, but one thing remains the same, it is very difficult to get an insurance policy to pay out. You should look very carefully at the fine print of your policy and you will be amazed to find out what actually is covered, and what exclusions and exceptions apply.

For example, unemployment protection may only kick in after a certain period of unemployment, will not count if the unemployment was voluntary, and can require proof that the applicant has actively sought employment, and not turned any down, for the period since losing their job. This will give the insurance company literally dozens of reasons for refusing pay out in most instances.

Don’t Accept The First Quote!

As well as these conditions, you should also shop around. The person you are borrowing from will always offer you a policy, but this unlikely to be the best policy available and a little shopping around will go a long way. You will probably also find your self better terms or terms that suit your needs more closely. Government standards are in place to make sure such policies are clear and in plain language, but complaints are still pouring into consumer protection groups regarding these policies.

The basic advice here is be very careful if opting for expensive insurance policies. Make sure you understand the terms, and that you think they might be of benefit to you, and if you don’t want the policy, just say no.

Low Rate Auto Loan

Low Rate Auto Loan

It is possible for people to avail of low rate auto loan. Actually, you can avail of lower than the average auto loan interest rates. But you are required to do your part of the bargain. If you wonder how, you can try the following suggestions.

One way to have lower low rate auto loan is to have good credit standing. People with good credit history are considered low credit risk and are therefore given the opportunity to enjoy lower low rate auto loan. Lender will see you as a responsible creditor not a liability. Lenders will feel comfortable lending money to people with good credit standing. For people with good credit record, low rate auto loan could be anywhere between 2% to 15%. For those with bad credit, low rate auto loan could go as high as 30%. The high interest rate is imposed by lenders because people with bad credit score and is known to make payment lapses are often considered by lenders as great credit risks. They just want to protect their investments. If you think you have poor credit rating, try to increase your rating before you apply for a loan. You can do this by paying off any current debts, make monthly payments for debts you can fully pay off or putting money into your savings account. Your savings deposit will help your credit score since this serves as your pool of funds in case of emergency. Once your credit score improves, your low rate auto loan will follow. You should postpone purchasing a brand new car after your credit rating improves. By then, you can avail of low rate auto loan.

Another way to avail low rate auto loan is to give a bigger down payment. The more you pay for down payment, the less low rate auto loan you will incur. For lenders, those who pay huge down payment and have lesser borrowing are considered low credit risks.

Another method to avail low rate auto loan is to refinance. Refinancing auto loan is certainly a practical way to secure a car at a lesser cost. This is for people who already have an auto loan and want to avail of lower interest rate for the remaining balance of their auto loan. The refinancing companies will pay your current balance. In turn, you are expected to make monthly payments to the refinancing company for a much lesser rate. The reason why most people are put off by refinancing is the idea that they will be made to go through rigorous processing. But this is not actually the case. Refinancing is quite easy and simple. And much more it will enable you to enjoy low rate auto loan.