Mique

As I was walking through the lobby of the Leonard C. Burch building the other day, I noticed a pamphlet from a “payday loan” provider.  Seeing it, solidified in my mind the need to discuss these programs and companies in more detail.  Therefore, I hope you’ll forgive me for changing the order of our discussions to cover predatory lending practices in this column.

If you are taking out a loan, you have many options to choose from.  The trick is to find the right one to suit your needs, and to steer clear of those that may try to take advantage of you.  While many lenders conduct honest business, some do not.   Excessively high interest rates, unnecessary fees, and hidden charges are a few of the things to watch out for.  There are certain types of lenders that are referred to as “predatory lenders” because they take advantage of people.  Predatory lenders share many traits.  Here’s how to recognize a predatory lender:

• They offer loans without taking into account a borrower’s ability to repay the loan.
• They charge unusually high interest rates for a loan.
• They give loans with excessive or hidden fees.
• They tack on unnecessary costs, such as prepaid single premium life insurance.
• They target their services at the elderly, minorities, or low to moderate income communities.
• They might place a lien on your vehicle, home, or other form of collateral that far exceeds the value of the loan.

Predatory lenders take many forms, but can often be found at payday lending stores, storefront finance companies, rent-to-own stores, and title loan companies.  Think twice about taking a loan from one of these businesses and make sure you understand the interest rate, fees, and loan terms before taking out a loan.

As consumers we are often tempted to buy goods and services. Over time, these purchases can add up, especially for big ticket items like vehicles, appliances, TVs, and pricey electronics. The ability to make smart purchases is a vital skill in today’s economy.  You can make smart purchases, if you are a savvy consumer.  Here are four things to keep in mind when considering a large purchase:

Research

Whether you are in the market for a new truck or a new refrigerator, take the time to do your research and study up on all your options.  The internet has many consumer websites filled with great information to help you make a smart purchase.  For example, if you’re planning to go car shopping, information such as: vehicle reliability, price, fuel economy, resale value, and safety features are just a few items you’ll want to know ahead of time.

Affordability

It is important to figure out if you can afford the purchase in the first place.  Review your budget to calculate how much you can afford to spend on an item.  Make sure you understand all the hidden fees or additional costs that may be associated with your purchase.  For example, if you are buying a car, make sure to include any additional costs you might incur such as car insurance, gas, and maintenance.  It can add up fast!

Payment Options

When you are planning to make a larger purchase, you need to decide how you will pay for it.  Cash or credit is a major decision when making a big purchase.  It is fine to use credit if you have budgeted for it!  And while credit might be cheaper in the beginning, it usually costs more over the long haul.  Then again, sometimes credit is the only option, so review the information about loans, rates, and terms, so you choose an affordable loan and a lender that meets your needs.  When financing, also check your credit report well in advance, so there are no surprises when you actually apply for credit.  Check AnnualCreditReport.com; or call 1-877-322-8228 to receive your credit report.

Negotiation

Negotiation is the process by which two or more parties come to an agreement.  Almost any time you purchase something through a salesperson, the deal will be finalized by a negotiation process. Negotiation might also be the most important part of a purchase, because the steps listed above won’t matter much if a smooth-talking salesperson gets you to stray from your game plan.  Remember, a skilled salesperson can have the ability to persuade a person to pay more than they can afford, bury them in a bad loan, or sell them a product they don’t really need.

Note:  Many sales people work on commission.  A sales commission is a fee paid for selling a certain amount of goods or services.  Commissions are common in the sales industry and sometimes lead to aggressive or pushy sales tactics.  A salesperson may push you to make a decision that benefits them, and doesn’t benefit you, so they can make a commission.