Guaranteed High Risk Personal Loan
Before entering into a loan agreement for debt consolidation (whether you have bad credit or good credit) you should be aware of the usury laws in your State. Know the law and protect yourself.
Guaranteed high risk loans taken based on a high interest rate, and for personal reasons, can be applied for at your local banking institution. If that is not an option, you can apply on the Internet.
Just keep in mind though, I’ve never met a loan shark with clean teeth. In other words, read all loan agreements closely before signing.
Online lending can be precarious at best if you consider there a lot of online lenders that claim to guarantee financing to people who are considered to be “so-called” high risk borrowers.
There is a risk factor here that is more for the borrower than the lender – we’re talking about predatory lenders that charge huge late payment fees and extremely high interest rates throughout the entire term of their loans.
It goes without saying, you need to avoid these lenders all together.
In this piece we will place three different examples of guaranteed high risk loans that have been approved by three different online lenders.
All of these lenders have been featured on Financing-USA.com at one point of time or another.
1. Guaranteed High Risk Loan at 13% APR over 5 Years for $5000
This is a typical high risk loan for $5000. The borrow had a FICO of under 600. Being a 5 year lending term the borrower was lucky to even get an interest rate as low as 13 percent over the principal.
For this calculation we’ll use our loan calculator found on the right hand side of our page.
We enter in the loan amount 1st, the interest 2nd, the years of the term 3rd, and the periodic payment frequency last.
So this case study the numbers played out as; $5000 = Amount/Principal, 13% Interest Rate, 5 Year Term, 30 Day Period Between Payments/One Month.
These loan calculation results come out as follows,
$5,000 Personal Loan Calculation Results
Total Amount to be payed: $6651.77
Total amount of interest $1651.77
As you can see, the payments are quite low, but if this loan was to be guaranteed there would be a very high late payment penalty on it.
The lender in this case charged a hefty administration fee to approve it. Fairly standard practice when it comes to high risk borrowers.
2. Guaranteed High Risk Loan at 17% APR over 10 Years for $10,000
For this example the lender really stuck it to the borrower at 17% interest on the so-called high risk personal financing term.
In this case the payment period frequency was the same as the first example – 30 days or monthly. The length of the loan is 10 years and luckily it’s not a compound interest rate.
After our calculation it looks like this;
$10,000 Personal Loan Calculation Results
Total Amount to be payed: $18,569.99
Total amount of interest $8,569.99
In this example we see that because the borrower has such a high interest rate at 17% they end up paying for the principal almost twice.
This kind of personal loan is to be avoided of course due to this amount of interest. An APR this high can cripple your average high risk borrower if they have other loan responsibilities on a monthly basis.
3. Guaranteed High Risk Loan at 21% APR over 7 Years for $20,000
The borrowers in this example may have been better off not applying for the loan in the first place.
Sometimes there is no choice though if it’s emergency funding. In this case the borrower(s) likely needed a co-signer before they could get approved.
If you except the terms of this financing and you have a co-signer you will be guaranteed to get approval.
You can be sure that any bank that charges these kinds of rates will be shady at best. Unfortunately some borrowers just HAVE to the get the loan approved – and approved quickly. (within a week of applying)
$20,000 Personal Loan Calculation Results
Total Amount to be payed: $62,040.28
Total amount of interest $42,040.28
In the results of this loan calculation you can see how bad it is.
With an interest rate of 21% (APR) this borrower ends up paying $42.040.28 interest against the $20,000 principal outstanding amount. This is why this kind of an interest rate is illegal in some states.
In some countries that have fairly strict lending laws, this kind of high risk interest rate is criminal.
We wish you all the best with your search for financial help in your time of need. ONCE AGAIN…make sure you don’t rush into a loan agreement out of desperation.
Interest Rates For People With Low Credit Scores
As you can see with the three examples above they were all borrowers that were approved with interest rates over 12%. This is simply because their credit score numbers were so low and their hope of getting a rate low than that has vanished.
So we are always getting asked,
“What companies have the lowest interest rates for people with low credit scores?”
Good question right. Well the answer is in the walls of your friendly local credit union. However they won’t approve a loan for someone with a credit score under 650 without some sort of security – an asset for guarantee some kind, whether it’s home equity, item for collateral, or a co-signer.
So the best thing you can do if your credit score is in the dumps (below 600 or so) is find a willing co-signer with a good credit score over 700. I know that’s likely not what you want to hear but “thems the facts”. Otherwise you will be at the mercy of the loan sharks, and believe me – they have no mercy.
If you can’t find a co-signer and you have a huge amount of debt with a high interest rate then it’s time consider consolidating all your bills and liabilities into a consolidation loan. BUT, if your credit score is below 600 the lenders won’t approve you.
So rock and a hard place right.
So if you this is your situation below in bullet points;
- credit score below 600
- no collateral
- no home equity
- no co-signer
- no increased earnings
You only really have two options left in my opinion. Debt consolidation or debt relief.
Both are different – consolidation is a loan where you guarantee the bank you will pay back the entire loan over 3-5 years with one monthly payment and at a much lower interest rate than your existing credit balances. Debt relief is a completely different animal in that you are paying only a portion of what you owe. How much you pay back on your principal depending on the negotiated deal with your creditors.
You CAN do the negotiating yourself if you want, or you can use a service. There’s pros and cons to both.
You need to read the fine print and shop around the lowest interest rate.
Bye for now.