Level of interest

[FedupwithGE]

I currently pay $450 a month in a debt consolidation loan with GE, at roughly 18 percent interest. I have been very frustrated by the lack of information about why my interest rate is so high. I spoke to a local branch fellow recently who said I was rated a C (A being the best) - which puzzled me, because me and my husband have a clear credit rating, to the best of my knowledge, and a great payment history.

I also don't know why I was sold insurance on this loan that was pulled from market a short time later, if my premiums are still included in my monthly fee (it added $30-$50 to my original contract), and why I was never told the insurance was no longer offered.

And before anyone replies and tells me to live within my means blah blah blah, let me tell you that if I wasn't such a good money manager, we'd be bankrupt six times over by now. I have never missed a payment and I never will. I borrowed the money and I will pay it back. I just want to be treated fairly.

[computerflyer]

Don't take this the wrong way as it is not targeted at you, but it is reality that GE's financial services target what are called sub-prime borrowers.

> why my interest rate is so high.

GE charge high interest rates in return for providing loans to those with higher risks of defaulting. The rub is that whether your credit rating is A or Z, you are treated like one of their target market members.

> I spoke to a local branch fellow recently who said I was rated a C (A being the best)

Is this GE's internal rating to assure you fit their customer profile, or from Dun & Bradstreet or Veda Advantage? You can get your real credit scores from either - search on them for credit reports.

> I also don't know why I was sold insurance on this loan that was pulled from market a short time later....why I was never told the insurance was no longer offered

To protect GE from potential default according to their options on the day. Perhaps the GFC or a change of laws affected the insurance, but you signed up for what you did, and the why is now a mind game unless GE will release you from the insurance obligation. There is no reason nor obligation to inform customers of a product they have bought and that is in effect, but no longer sold.

> I just want to be treated fairly.

GE have an international reputation as a poor place to borrow from because of high rates, charges, and poor customer service; unless the banks and credit unions have knocked one back and one needs the funds. Another reason GE do well is that customers often don't do homework on what GE financial services really are. They equate GE financial services with GE as a top multinational.

[FedupwithGE]

Thanks for your reply, and I am not going to take it personally. I do have a couple of comments: the insurance was not for GE's benefit in case of default. It was actually to help us the customer cover the payments in case something happened to one of us to affect our ability to repay comfortably - and something did happen. It is an understatement to say that it would have been helpful to know the insurance no longer applied and was useless to us, so that we could make other arrangements. I still don't know quite where I stand, because I found out about the insurance no longer being offered quite by chance, and I've never been given any other information about it.

Secondly, I had no idea about GE's alleged international reputation when I took out my original car loan with them, a car I bought fresh out of university to get to work. There weren't trains or buses available, so I had to drive. The car yard had finance arrangements through GE, and they told me that no-one else would lend me money because I had a very small default on my credit report at that time, a couple of hundred dollars.

Trouble is, that default was the result of a parent stealing money from me that I had earmarked for the payment of a bill. Since I never heard from the utility company - no overdue notice or phone call saying where is the cash - I thought the bill had been paid and never realised what had happened until I bought the car. That was in 2003. I continued with GE for the debt consolidation loan because the car loan was secured and no-one else would touch us. The debt consolidation loan is also secured, and I cannot get a loan anywhere else to lower the interest rate because of the loan to value ratio, even though we are judged to be able to afford the repayments themselves.

Please understand I am just venting here... I have been dealing with the repercussions of my parent's act now for several years, and with the strain of our recent change in circumstances, and I am as frustrated as you can possibly imagine that we are not yet out from under GE. But I will do it, and then we'll never look back.

[DG58]

Can you please tell us how much did you pay for the car in 2003, how much of it was financed and how much do you still owe GE and how much is your car worth now, maybe it will help some other poor soul to make the right choice NOT to buy a car from this sharks, those car dealers who scream on the TV how they can put any unemployed, bankrupt, refugee, and anyone else who can't afford to buy a car in the first place into a car.

[owlsmeg]

Another approach is to try the auctions .. borrow from a family member auntil you have saved .. buy at the $2-4000 level old but sound car and just drive with minimal repairs (quite cheap per annum) .. there are many alternatives to debt ...

[Danny_b]

I'm presuming the current loan was taken out after 2004. If not, some of the below may not be valid.

GE should have given you a PDS from the insurance provider at the time the loan settled. This will have information regarding canceling your insurance. You may or may not be able to cancel, it varies between insurers. Swann are one of the more common providers, and I have found them to be very good when it comes to a claim, although GE may even use their own insurer.

You may be able to cancel it.

So far as your interest rate goes, it's based on your risk profile. The fact that you have made all repayments on a previous loan on time would have likely decreased your rate (had you missed a few, you may even be on a lot more than 18%). But it sounds like your assets are limited, which would contribute to the increase in interest rate.

If something happens, and you are unable to make your repayments (unemployment, off work due to injury) for a prolonged period of time, with a limited asset base, the debt is more likely to be written off. If the car has to be repossessed, and you owe more than the car's value, GE will have a significant shortfall.

It's likely that few other lenders will lend to you when the loan is more than the security value. If you can cancel your insurance, and keep the same repayments (possibly even increase), over time the loan should be lower than the security value so that you can refinance.

The good thing is, the default should now be off your credit rating.