Consumer Credit Insurance

                                                                  Consumer Credit Insurance

Consumer credit insurance

Consumer credit insurance (CCI) covers you if you can’t meet the  repayments on your credit card or loan because of unexpected circumstances like unemployment, 
Sickness or injury. the benefits, limitations and costs of this insurance can vary, 
And the insurance offered by the credit provider might not be the cheapest.

Check if consumer credit insurance is included in a credit contract before

you sign – some credit providers include it and others don’t.

A credit provider cannot force you to have this insurance and in many cases

you may not need it. You can ask the credit provider to remove it from the contract

Consolidating loans or refinancing

If you have a problem managing your repayments, rolling all your loans together into a single loan can sound like a good idea. ‘Consolidating’ or refinancing your loans can work for some people, but

for others it may be only a short-term fix, especially if you can’t meet the

repayments on your new loan. There will usually be extra fees or charges to pay as well.

If you’re having long-term problems trying to repay your home loan, try to

come to some arrangement with your existing lender through negotiation

or by applying for a hardship variation. If this isn’t possible, 
you may be better off taking the hard decision to sell your home so you have some money left over after repaying your debts to start again.

Otherwise you could pay substantial fees to refinance and still end up

having to sell your home, with less money left over after the sale.

Talking with your credit provider

If you can’t keep up with repayments on a credit card or loan (including a

home loan), talk with your credit provider straight away.

Many credit providers will try to help you if you can’t make repayments

because of illness, unemployment, or other financial difficulties. It’s

important to contact them as soon as possible.

They will assess your situation and, in consultation with you, work out what

kind of help is available. You can ask your credit provider to change your

contract in a number of ways. with negotiation, you have a wide range of options, 
From temporary assistance (for example, short-term payment proposals) to longer-term

flexible arrangements. you should ask for what will work best for you, keeping in mind that you still

need to repay the loan. If you can’t come to some agreement with your credit provider, ask them to

review their decision if you think it’s unfair. If you are still unhappy with their

decision, you can complain to an independent dispute resolution scheme

Debt agreements

A debt agreement is an option under the Bankruptcy Act where you and

the people and businesses you owe money to, agree on a compromise

about how much you will pay them. debt agreements depend on all the parties agreeing to the same solution, which can be difficult to achieve. They are listed on your credit report.

Some companies advertise debt agreements as a way of controlling or

consolidating debts, or avoiding bankruptcy. These companies can charge

high set-up fees. always get advice from a free financial counsellor, your local community

legal centre or Legal Aid office before you sign any debt agreement

Consumer leases or ‘rent to buy

You hire or buy an item (for example, a fridge or computer) over a certain period of time

and make regular payments on the rental or purchase price (for example, each month).

With a consumer lease, you hire the item for

an agreed period of time but do not automatically own the item at the end

of this period. with ‘rent to buy’, you make a commitment to buy the item at the end of the

rental period, paying an extra amount of money to finalise your purchase. 
What to watch out for

1  you may not have the right to buy the goods – it’s at the lender’s discretion

2  the terms and conditions of these leases or rental agreements can be

complicated

3  you’re likely to pay more for the item than if you bought it upfront

4  you may be charged fees and/or penalties if you miss repayments, break

the lease or pay it off early

Make sure you always ask questions about the terms and conditions of the rental or lease

agreement i f you intend to buy the product, check that you will own it at the end

of the agreed period – you may think you’re buying something by installments only to find out you still have to pay more to own it

        Using a broker

Finance or mortgage brokers are go-between who arrange loans for people for a fee (usually called a ‘commission’). A mortgage broker specialists in home loans

A commission is often paid to the broker by the credit provider whose

products they sell, but sometimes the broker will charge a fee to the

customer. In some cases, a broker may get both. Make sure you understand

the fee structure for this service and compare fees charged by different

brokers. finance or mortgage brokers can offer you a variety of loan options. They

can help you select a loan and manage the process through to settlement.

But they may be limited to a particular range of products.

For example, if a credit provider doesn’t pay commissions, their loans might

not be included on the list of products that a broker offers. You may be able

to get a better deal by shopping around yourself.

If you need the money by a certain date, ask the broker how realistic this is.

If they agree to secure the funds for you, make sure you have this in writing.

But don’t be pressured into signing something you’re not sure about –

always take time to think things through.