Credit Protection for Non-Home Loans

When you get a personal loan, whether for a new car, to make home renovations, to send your child to college, or even simply to take a much-needed vacation, you should feel happy. The loan will allow you to get something you need, and the extended payment schedule allows you to afford the payments without stress. When you agree to a non-home loan, you never imagine that the affordable, manageable payments would ever be out of reach.

Unfortunately, life isn’t always predictable. You may get sick, get in an accident, or even, heaven forbid, lose your job and struggle with a continued unemployment that puts your loan payments out of reach. Even worse, you could pass away, leaving your spouse or other family members responsible for the loan. Rather than spending the money you leave behind to pay bills and manage the expenses of a funeral, it disappears to creditors.

If this happens to you, it’s easy to feel overwhelmed. That’s why credit protection for non-home loans exists. When you get a loan, you have the option of purchasing credit protection at the same time. This protection kicks in under specific conditions, such as coming down with a life-threatening illness or losing your job, and suspends the loan payments and interest accrual until you are able to pay again. If you unexpectedly pass away or are permanently disabled, this credit protection can also be used to pay off the remainder of the loan. This allows you peace of mind to know that your good credit remains intact, even while you temporarily are incapable of paying. It’s a type of insurance that allows you to do exactly as it sounds—protect your credit.

Should I Get Credit Protection?

Credit protection offers the benefit of peace of mind and can be incredibly helpful in certain cases where your financial status unexpectedly changes, but is it really worth the monthly cost? The answer isn’t really clear.

Credit protection for non-home loans isn’t cheap. It usually costs about $0.85 to $1.35 per month for every $100 balance you carry, which can add up very quickly. In return, the average consumer who applies for benefit payouts is only successful about 70 percent of the time, much lower than the insurance industry averages of 80 to 95 percent. This is largely due to the high numbers of exclusions that apply to credit protection plans, most of which you can’t even find out about until you already have signed up for protection.

In the end, credit protection is a gamble. It may be worth it if you know that you have a shaky financial situation or may be facing a life change like a divorce or adoption. You will have to simply crunch the numbers yourself to find out. Still, there may be better ways to protect your credit when the unexpected happens. It is worth talking to a consumer protection lawyer to find out what other options you have to deal with your debt issues. Call the Ohio consumer protection lawyers at Luftman, Heck, & Associates for a free consultation on your case today at (888) 726-3181. Find out if there may be better ways to shield your credit from disaster.