What are debt cancellation or suspension products offered with my auto loan?
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In general, debt cancellation eliminates your loan if you die, or cancels the monthly payment if you become disabled, unemployed, or suffer some other hardship. Debt suspension may temporarily postpone all or part of your monthly payment while you are facing a hardship.
Debt cancellation or suspension products are generally offered to you by your lender or dealer as you’re finalizing your auto loan agreement. Similar to credit insurance, these products promise to provide protection if you experience certain hardships. But unlike credit insurance products, they are not regulated by state insurance officials. They are also optional add-on products that add additional costs to your loan, ultimately increasing the interest you’ll pay over the life of your loan. The products often have eligibility restrictions and based on a consumer’s individual circumstances, may not provide value.
Debt cancellation agreements
If you meet certain qualifications (and avoid the exclusions), debt cancellation offers the promise of eliminating debt if you die or canceling your monthly payment when disabled, unemployed, or if you suffer some other specified hardship.
Debt suspension agreements
Debt suspension products promise to temporarily postpone all or part of your monthly payment while you’re facing a specified hardship, but you are still expected to make up the payments in the future.
If you decide you need these products or insurance, there may be cheaper ways for you to obtain coverage. For example, life insurance may be less expensive and would allow your family or estate to pay off other expenses in addition to your auto loan.
If you have a complaint or a concern about this product, you can submit a complaint to the CFPB.
Know what is negotiable
Did you know that you can negotiate the terms of your auto loan? Negotiating can save you hundreds or even thousands of dollars over the life of your loan.