Loan Disclosures

Talk about non disclosures! There is no law or regulation that requires lenders to use a standard format to disclose all their interest charges and fees. That means that the government has not evolved a formula for lenders to add up all the hidden and obvious charges and come up with a cost of the loan which is comparable with loans offered by other lenders. That means that you have been left to figure out the loan jungle out there on your own.

That gives lenders the opportunity to play around with the way they sell you the loan. For most of us who haven't grown up to be financial experts, we usually buy into a sales pitch based on cheaper interest rates. The loan could turn out to be a very expensive loan if you added up the processing charges and the dates on which you have to pay back your instalments. So what do you do? Get the lender to give you all the charges, obvious and hidden, in writing with a statement that there are no other charges. As a practical matter, most lenders will not give you anything in writing because they thrive on making money through the back door. So don't just believe the lender. Talk to others who may have taken a loan from the same lender and see what their experience has bee n sure about what you are getting into before signing any loan documents.

Always read the loan application and offer documents and look for the hooks. Here are some typical pointers:

Check if there is a prepayment penalty. If there i's find another lender.

Look for the longest grace periods look for cards that give you the maximum days to pay back the due amount without an interest charge.

Read the fine print carefully. Remember, if there is a problem later, what is written is what counts. Verbal assurances carry no weight.

If the annual fee/interest rate the card charges is lower than other cards, check to see if the rates move higher after the first few months.