Are you wondering what is credit assurance? Very simply, credit assurance is an assurance policy that protects a loan on the chance that you are unable to make the repayments. The next time you have occasion to apply for a loan or mortgage, you will be asked if you want to buy credit assurance, or it might already be included in your loan proposal. If so, it will increase your loan amount and you'll pay additional interest.
Credit assurance usually is optional, which means you don't have to purchase it from the lender. Before deciding to buy credit assurance from a lender, think about your needs, your options, and the rates you're going to pay. You may decide you don't need credit assurance.
If you decide to get credit assurance be aware that it can be an expensive form of assurance. For example, it may be less expensive and more practical for you to get life assurance than credit assurance.
Before deciding to buy credit assurance, ask the lender the following questions:
How much is the credit assurance premium?
Will the credit assurance premium be financed as part of the loan?
Can you pay monthly instead of financing the entire premium as part of your loan?
How much lower would your monthly loan payment be without the credit assurance?
Will the assurance cover the full length of your loan and the full loan amount?
Can you cancel the assurance? If so, what kind of refund is available?
Prior to signing any loan papers, ask the lender whether the loan includes any charges for voluntary credit assurance. If you don't want credit assurance, tell the lender. If the lender still insists that you take out credit assurance, find another lender.
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About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.