At the top of the list of dumb – poor credit unsecured loans take the cake. These are usually made in the form of payday cash advance loans. They are widely advertised as no credit check loans, poor credit unsecured loans, bad or no credit loans, unsecured personal loans, and fast cash advance loans. Just about anyone will qualify as long as they have a job, are an adult, have a bank account and a regular income.
It is amazing that the income level requirement is so low, only about $1000 for work income and even less for government generated income like social security or disability payments. Doesn’t it make sense that people with this little income are the ones least likely to be able to afford to borrow money? Wouldn’t they be most likely to have a problem with credit or a loan payback?
The short term loan industry thrives on getting low income people hooked on easy-to-get loans with very high interest rates. Instead of low bank interest rates of up to 36%, the poor credit unsecured loans are offered at interest rates that start at around 360% and can go higher than 1000%. These loans are very short term loans, so the interest fees do not seem as high as they actually are. If you get into a cycle of repeat loans you will be paying more in fees in a short time than the loan amount is for, and that is dumb.
It is sometimes possible to borrow for a longer term, even for several years, and for larger amounts than you can borrow from the payday loan industry. These unsecured personal loans are even dumber because you then stretch out the high interest over many years instead of just weeks. There just cannot be anything that important that you promise a good portion of your future income to someone else. It is far better to find cash by selling something, borrowing from family or getting a second income.
These loans are a dumb idea from the beginning, for the lender and for the borrower. Think about it before you sign any loan agreements.
Never take out these loans to buy something. If you want to improve your financial situation you need to do everything you can to eliminate your debts. Contact a non profit debt consolidation company if you need to.
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