Exploring the Fine Print of Every New Credit Product
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However, when looking at a new credit product or loan, it is important to take note of some key phrases. It might seem like the interest rate, APR, minimum payments and loan length will be the ones to watch out for, but there is another one that surprises you; “Iowa.”
Next time you read the tiny print of a credit card deal or loan contract press Ctrl-F to look for “Iowa.” This small thing actually stands for something big: consumer protection. Iowa has one of the strongest borrowers’ protection rules due in part to Tom Miller–the attorney general of Iowa. He has an extensive consumer credit regulation which he developed over many years. These regulations prevent predatory lending behavior seen elsewhere in the country.
For example, Iowa limits payday loans to $500 so that borrowers do not go too far with what they can afford. Also strict fee and interest rate structures including a 21% cap on automobile title loans ensure that consumers are not burdened with excessive financial obligations unnecessarily. Installment loan costs are also restricted by laws while predatory lending practices are banned when it comes to student loans as well as those from non-profit universities.
However, there are some lenders who don’t appreciate these stringent measures because they aim maximum profits. As a result, multiple financial institutions exclude Iowans from their offerings – such as this provision added at end of fine print: “Offer not valid to residents of Iowa.”
Be cautious if you see this term in your credit application or loan agreement. It means that the terms may not be advantageous to your side. Still, though options may be limited for Iowans; ask about their terms and whether other alternatives exist. By considering such circumstances like a person’s income level or his/her ratings on various issues e.g., credit history, you can better negotiate your financial obligations with creditors based-on your own judgment on these issues.
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