Additionally, many such policies are designed so that companies can deny coverage to you even when it appears that you have a valid claim. For example, the insurance may not cover many types of accidents that you would expect it would cover. Any benefits that are paid out are limited to the amount left on the loan, so that you never actually receive much, if anything. You will always be better off buying insurance from other sources. While you have the legal right to turn down credit insurance and many other extras, you are likely to be compelled to pay for certain other charges if you want a loan from a particular lender.
Examples are property insurance on the collateral and title examination fees.
However, you may be able to negotiate and lower the amount of these fees. If mandatory charges seem overpriced to you and the lender is unwilling to negotiate, shop around for another lender. You will find a lot of differences among lenders as to closing costs and other charges. In addition, you should always factor in the cost of all extra charges when you are trying to decide whether you are saving or losing money by refinancing existing loans with a new loan. Prepayment penalties When you pay off old loans through refinancing, there are almost always significant prepayment penalties on the existing debt.