Complaint Review: Household Finance - Dearborn Heights Michigan

It isn't easy to compute loan terms by hand. But it is simple to find machines that do it. This Web-based calculator is about as simple as they get: http://www.hughchou.org/calc/missing.cgi Also there are handheld financial calculator sold at office supply stores for about $30. If you had one of those, you could tell immediately if a "loan boy" is blowing smoke at you. I doubt many of the customers at HFC arrive packing them. It would be interesting to see how the loan sharks react. The key to comparing loans is the APR. If they are simple loans, with no "points" or fees added in up front, the loan with the lower APR is ALWAYS a better deal. The first offer you got in the mail was for $4001, with 48 payments of $138. They didn't tell you that's an APR of 27.4%!! Illegal in many states. If you knew that beforehand you would have just thrown the offer away. So that's why they didn't mention it. Later they must have found your credit was fairly good (clue #2 that you don't belong in the HFC office) and offered a better deal: $5100 at 48 payments of $138. That's an APR of 13.5%, which might be an acceptable rate for the "less than perfect credit" market. But that deal wasn't for real anyway. Instead they set up a revolving contract. The difference is that it's an open-ended deal. The cost of the loan is the same if the APR is the same (though they may be compounding daily now, raising the effective APR slightly). BUT THE KEY ADVANTAGE FOR THEM IS THAT THEY DON'T HAVE TO DISCLOSE THE NUMBER OF PAYMENTS! It's exactly like a credit card, only there's no card involved. The time required to pay back the debt depends on the amount paid. Making only the minimum payment every month will typically require a very long time, possibly forever. Maybe the "loan boy" was still talking 48 payments, but the only words and numbers that matter are the ones on the contract... ...which you didn't read. The 25% APR would have been on there in a big box. You would have noticed that it's a revolving account. But without running the numbers yourself though you wouldn't have known how many payments would be required. The answer is 71 payments (almost 6 years) of $138 or 108 payments (9 years!) of $119. Since you're stuck with this now, you can pay off the loan early by making larger payments. If there's any of the $5100 left that you haven't spent, send it back to pay down the loan immediately. The more you pay, the sooner you pay, the more you'll save. Never be late with a payment, as I'm sure their fees are astronomical. If you pay it off soon, it won't cost much more than $5100 to get away from HFC. Such a high APR shouldn't be carried for more than a few months. This is painfully obvious: READ THE CONTRACT BEFORE SIGNING! Take it home to review carefully and think about whether you should accept it. If they won't let you, saying "We can only loan you this money RIGHT NOW," that's a sure sign that it's a rip-off operation. Ask youself if you need that money so bad RIGHT NOW that you'd be willing to obligate yourself to pay an UNKNOWN amount later. Have someone else go through it if you don't understand it. If you agree to the deal, MAKE A COPY OF THE SIGNED CONTRACT BEFORE IT LEAVES YOUR HANDS and keep it in a safe place. This is your only defense should they decide to doctor the contract up later. On the other hand, if they can't produce a signed contract, technically you may owe nothing. But that's a difficult fight.

In addition to my earlier comments about HFC's illegal practices, they will ruin an otherwise good credit history. Since I am one of their customers, they will call from time to time to get me to take out a bigger loan. The first time a woman from their office called, I told her I wasn't interested. Two weeks later, I received a credit report from a credit reporting agency telling me that I had been turned down for a loan with HFC and that I was not qualified at this time to increase my current debit. Great! Now I have comments on my credit reports, that I was turned down for a loan which I never applied for. There must be laws somewhere to punish HFC. I can't believe that a company can get away with this. Watch out consumers. Need money? WARNING "DON'T GO TO HFC" WARNING.