Scenario: Choosing a lender
Now, test your judgment: Mariana is considering a loan. Which choice do you think is best for her?
Mariana’s roof leaks, so she needs to act fast. A local roofer has recommended a lender. He’s offering the amount she needs and a very quick loan process. In fact, all she needs to do is sign his standard agreement; he’ll fill in the details later. The monthly payment is higher than she hoped, but he says this can be adjusted after 90 days. Because all the roofing companies are so busy, he urges her to sign the agreement today.
The consequences of your choice
See the consequences of your choice for Mariana and hear what the coach has to say.
“I shouldn’t have signed a blank document! He didn’t write in the things he promised me. I realize now that he was just rushing me and scaring me into signing fast. At my bank they told me that some states have laws letting you back out of a loan up to three days after signing. Thank goodness our state has a law like that – but I should have checked before I signed.”
I’d think twice before you give this advice! Next time, tell Mariana to shop around and get all of her questions answered … before she signs anything. Remember, to buy time, she can always tell the lender she has to check with someone else before making a decision.
The consequences of your choice
See the consequences of your choice for Mariana and hear what the coach has to say.
“I thought if I got the low monthly payment everything would be fine. But I found out the hard way that a low payment doesn’t guarantee a good deal. What matters is the total cost of the loan. When the lender filled in the agreement, he added lots of extra charges we hadn’t discussed. I should have insisted on getting all the terms in writing – and made sure I understood and agree – before I signed.”
Sorry, but you’re steering Mariana in the wrong direction here. The promise of a low monthly payment doesn’t make this deal a safe one. Mariana needs everything in writing, and shouldn’t sign anything she doesn’t like or understand, even if they cancel the loan offer.
The consequences of your choice
See the consequences of your choice for Mariana and hear what the coach has to say.
“Thank goodness I didn’t sign! When that man was rushing me to sign a blank document, I knew something was wrong. Even though I was in a hurry I knew I should ask a lot of questions, shop around and compare. I ended up finding an established lender with a good reputation and satisfied customers. They gave me everything in writing so I could check the numbers.”
Congratulations! You did a good job spotting some of the warning signs of a predatory lender: a blank agreement, sales pressure, and no opportunity to shop and compare. You definitely did Mariana a huge favor by saving her from a very dangerous deal!