If you’re in need of extra cash quickly it can be easy to make the mistake of falling into a debt trap offered by predatory lenders. Advertisements promise an attractive solution for those with bad credit, but these loans often end up costing thousands of dollars in fees and interest.
Many short-term loans that offer a fresh financial start with low interest rates claim to provide you with “protection” and “loans designed to help you get out of debt faster” – but these claims couldn’t be farther from the truth. New technology makes it easy to get approval for an installment loan, but many consumers don’t understand what they are signing.
These high-tech finance companies pretend to help you, even offering a free credit check. The fact is that credit checks are already free and they actually want access to your credit information so they can drive you further into debt.
Installment Loans from alternative financial institutions have become a popular option for those who need $500 - $35,000. They are heavily advertised to consumers who can’t qualify for a traditional bank loan and online pre-approval means customers go further into debt in minutes.
Interest rates can be as high as 60%, but the calculation presented to the consumer typically shows interest rates for a two to four-week period. Additionally, there are hidden fees and charges that are triggered when you breach certain terms and conditions; adding up to annual interest rates over 60%!
These companies count on their customers not understanding the agreement so they can profit from charging high interest rates and fees. After getting access to credit information these companies can see if you’ve maxed out your credit cards, are having trouble making payments, and if your credit score is dropping.
Next, the staff and clever online marketing tactics target people that desperately need debt relief with offers to extend repayment terms or increase the loan amount– adding to the company profits while customers sink into an impossible amount of debt. Installment loans were the fastest growing type of debt in Canada in 2018; they are often a last resort that eventually forces many people into insolvency. Don’t make the mistake of signing an agreement that you can’t afford; there are other options!
Doyle Salewski offers a free consultation with a debt management professional who will access your situation and help you determine affordable options that will allow you to work towards a debt free future. Contact us to book an appointment today.