The Consumer Financial Protection Bureau is a government organization that was created by congress for the specific goal of protecting consumers in the area of finance. The CFPB helps consumers by giving them the information they need to understand the terms of contracts they may sign. In addition, they also receive and process complaints from consumers concerning various practices in the private sector regarding contracts and behaviors that are thought to be unfair, deceptive, or illegal.
How does the CFPB help?
Although there are a range of services offered by the CFPB, or those without a background in finance and law it can be especially helpful with understanding contracts. They provide information needed to help an individual understand exactly what they are agreeing to before signing the contract. Because the CFPB is not motivated by profit, they offer accurate information to consumers and can be trusted to provide information that is both helpful and necessary.
If you are looking to sign a contract for a mortgage, student loan, or even a credit card, the CFPB provides information that can help you understand the specifics of what you will be agreeing to. This includes interests and fees, as well as any other stipulations that you may not understand. They can also alert you to what questions to ask because new laws require greater disclosure from financial companies for their contracts. By educating yourself with the information provided by the CFPB, you will have much greater protection than a typical consumer.
What clauses should consumers avoid agreeing to?
There are many aspects of a loan or credit contract that are legal, but should be avoided. In many states some popular clauses are not legal, like a balloon payment. This is a lump sum that is due at the end of the contract. These payments can be too high for many people signing the contract, and the result can be a default. Naturally, a default will benefit the lender and not the consumer. You should avoid balloon payments on any type of loan. Other contract clauses that should be monitored are attorney’s fees, late fees, and prepayment penalties.
How can the CFPB assist consumers who have signed poor financial contracts?
If the contract was legal, there is usually nothing that can be done. This is why education about financial contracts is essential. However, if you suspect that something was not done legally, or perhaps the lender did not disclose an aspect of the loan contract properly, you can file a complaint with the CFPB. They will investigate the issue and work with the lender to arrive at an appropriate solution.
Regardless of the type of loan or credit card you are looking to obtain, it will benefit you to research all of the information that is available from the CFPB.
