It’s fairly common knowledge that if you have bad credit and can’t qualify for a loan, you can go to a high-risk lender. High-risk lenders charge high interest rates will give personal/consolidation loans to individuals who do not qualify for loans elsewhere. Since they are dealing with high-risk customers, there is a high probability that many of their customers won’t be able to repay the loan. Therefore, they charge high interest rates to make a profit. They charge these high rates to make a profit.
Often times the customer is requesting a loan in order to solve another debt problem. This can end up being a vicious cycle that will force the customer to remain in debt.
Your payments can almost double
Some customers may be charged almost 40% interest. Therefore, customers may be looking at paying almost twice as much as they borrowed when it’s all said and done. Lenders may also include some form of insurance and other fees that drive the cost of the loan even higher. Therefore, the way I look at it is the high interest rates that you pay, end up paying for the lender’s customers who don’t repay their loan.
You may end up paying even more
If you are having problems paying off your loan, high-risk lenders will often times lower your monthly payments (for an extra fee), which will in turn extend the length of time you are paying off the loan. Therefore, their act of kindness is actually increasing the amount of money you owe them. That is why they are so willing to extend the payments.
You may lose rights to your assets
Some high-risk lenders ask for liens on your assets, including vehicles, furniture and household effects. A lien gives the lender the ability to sell those assets if the customer defaults on a loan. A lien makes a loan less risky for the lender. Under provincial law, these are assets that are exempt from seizure by lenders unless the owner gives a lien to a lender (meaning the government allows anyone to keep these assets, even in bankruptcy, because they are necessary). Lenders usually only want liens on assets to force payments form customers. And, if the customer ends up filing bankruptcy, the lien gives them rights to the assets that survive bankruptcy.
Be cautious when dealing with lenders. Ask a lot of questions and don’t limit yourself to discussions with one lender. Look around. Find a lender that works best for you. Just because a lender will loan you money, that doesn’t mean you are able to repay it. Review your finances before signing for any loan. Make sure you will be able to afford the payments.
If you have a high-interest loan and can’t make the payments, contact our office today. We are here to help.
