Good deals are easy to come by, but great deals are a little more challenging. That’s because too often, we allow businesses to tell us what a good deal actually entails.
In order to know if you’re being charged a fair price in the current market, you’ll need to shop around. The following three expenses can be filled with hidden fees and terms, requiring extra caution before signing on the dotted line:
1. Gym memberships
Imagine signing up for a month-to-month gym membership that only costs $19/month without any signup fees. You may be tempted to think you’ve struck fitness gold. It may look good because you’re certain you haven’t been charged any outrageous fees (you check your bank statement religiously), but the moment you want to cancel your membership, you’re likely to be hit with a hefty “farewell fee.”
Month-to-month memberships aren’t exempt from cancellation fees
Gyms are notorious for charging hidden fees, and they get you coming and going. If you thought cancellation fees were limited to long-term contracts, think again. It’s not uncommon for gyms to charge up to $100 to cancel a month-to-month membership.
The best way to approach obtaining a gym membership that works for you financially is to personally visit the gyms you’re considering joining and ask to read a copy of the contract.
Regardless of what you’re told by the staff, read the contract and take notes on what fees are buried in the fine print. You have to go in with the understanding that nobody is going to tell you the truth about what’s in the contract. You’re going to get charged fees no matter what gym you join, so it’s just a matter of comparing the costs to see which one works better for you.
2. Car loans – especially when refinancing
Anytime you take out a loan to buy a new or used car, you’re probably going to have a high interest rate. As time goes by, you may hear about other lenders offering lower interest rates and you may start to consider refinancing your loan in order to save some money.
LendingTree.com’s spokesperson Allison Vail says, “if you see a better auto interest rate than you currently have, you should refinance even if it would only reduce your annual interest payments by around 1%, refinancing is worth a look.”
This makes sense, but before you jump into a refinancing deal, you’ll want to make sure you understand the terms and conditions of the new loan. You don’t want to turn a 4 year contract into a 7 year contract, and you definitely don’t want to lower your interest rate only to find your monthly payments going sky high, sucking up all of your cash reserves.
Ideally, if you can afford it, you’d want a lower interest rate that lowers your monthly payments so you can keep paying the amount you were before, allowing you to pay the loan off faster.
Also, do some research into the various companies offering auto loans to see if you qualify for refinancing. Often, lenders are happy to announce lower interest rates, but don’t always mention the other conditions you need to meet in order to qualify. Like having a car with less than 100,000 miles on it, no more than 9 years old, or that your loan needs to be for a minimum of $10,000.
3. Any paid subscription services with automatic renewals
If you’re like most people, automatic renewals appear to have been created strictly for your convenience. Unfortunately, that’s not exactly true. Although you benefit from the convenience of not having to remember to make payments, automatic renewals give the company the upperhand when it comes to getting ahold of your money.
Because automatic renewals are often abused by merchants, some states have laws in place that specifically govern how merchants can use automatic renewals. For example, in some states, it’s illegal to require automatic renewals for memberships and the merchant must allow customers to pay manually each month. Other states have basic laws that say merchants must make it easy for consumers to terminate an agreement, and affordably.
California has the strictest rules, stating that when a merchant is not compliant with The California Automatic Renewal Law, then all services rendered by that merchant to a California consumer “shall for all purposes be deemed an unconditional gift to the consumer.” That’s quite an expensive law to break.
Before you sign up for a monthly service of any kind, you need to do some digging to find out what you’re signing up for. You might be agreeing to an automatic renewal without knowing it, like this consumer who was continually billed for a satellite radio subscription he never renewed. Instead, when his credit card expired, they kept his service going and racked up the charges.
Pay close attention to what you sign, and always keep a copy of the billing agreement on file.
Always do your due diligence
While you should always make sure you read contracts before you sign on the dotted line, some businesses are notorious for not following their own agreements. It pays to do some research to find out if a company is known for making cancellations difficult, or charging fees that aren’t in the contract.
You may have the law on your side, but if it’s easier to avoid getting into a sticky situation in the first place.