Do Not Apply For High APR Installment Loans: They Will Destroy You!
For many people low on funds, their last hope is to get a high APR installment loan. Here is why high APR Installment loans are death traps.
Installment loans have become more mainstream in the last few years.
It seems that I have received offers from at least eight different ones in the last year, whereas in the past I never saw them.
It could be because my credit score fell and they swarmed in.
Either way, I need to warn you how destructive these little check offers can be.
When you get an offer in the mail, it is usually in a form of a check.
It is not a real check (some can be) but it is easy to call them or apply online and get the money within an hour directly deposited into your bank account.
When you have little money and are struggling with bills, it is easy to go ahead and cash the check or get the funds online.
The dollar amounts are usually, seemingly a lower amount, something you think you can psychologically pay off easily, like $500 to $1,500.
But, once you say “yes” to the funds and fill out their forms you’re screwed.
Yes, they usually give you 5 days to retract from the contract and offer, but many people who desperately need the money, go ahead and get the money.
The money arrives quickly and you usually spend it all quickly because you need food and to pay your bills.
Not many people read the fine print.
But, lo and behold, most of these loans have an APR anywhere from 300% to 600% annually!
Why is this legal?!
These loans are so easy to get and target the lower income class who are desperate and don’t usually read the fine print.
And, the loans are not to be paid in monthly payments usually, but BI-MONTHLY!
That means, you are paying $100 to $300 every two weeks!
If you only make $2,000 a month, one installment loan takes $200 to $600 a month from your income.
But, it gets worse, most people get several offers in the mail and are so desperate that they get more than one installment loan.
So, pretty soon, you are making $400 to $1200 payment every two weeks.
That is not even the worse part.
The worse part is that these loans take all the interest out first before your payments go to the principle loan amount that you borrowed.
I had an installment loan with a 562% APR. And yes, you read that right. Which should be legal.
Of course I didn’t read the fine print and realized too late that I had to pay $200 every two weeks, not once a month.
The first 6 payments, not one dollar went to the actual loan amount.
It just went to their interest.
These high APR installment loans should be illegal.
The only way to get out of this vicious cycle is to go default on these loans or not take them out at all.
Contact the Consumer Financial Protection Bureau and a good credit consumer legal agency, like the National Litigation Law Group.
The worse feeling in the world is drowning in debt with no end in sight.
That little check offer you receive in the mail seems so innocent.
You think you can easily pay it off when things get better, but things usually don’t get better.
Your best bet is to endure the hard times and ignore getting one of these installment loans altogether.
Also, these installment loan APR’s are so high and contract terms are so short that a debt consolidation agency, like Freedom Debt Relief, won’t even touch it.
You are really all alone in this high APR hell.
There is one last thing to know.
If you are holding onto dear life paying these things because you don’t want to lower your credit score, think again.
The credit score is just a made-up metric, probably invented by the Rothschild family, to keep us good boys and girls with our credit card payments and mortgages.
I filed bankruptcy about 9 years ago, and my credit score bounced back in about 3 years.
Credit score is not a big deal.
The main justification for people who cling to their credit score is because they say it saves on their mortgage, car payment, credit card payment, etc.
Most people who take out these installment loans already have a crappy credit score, so who cares.
Let your credit score fall so you can feel freedom again.
It is not worth paying these insane APR’s to keep a credit score of 650 or less.
A 650 credit score is nothing anyways.
If you don’t have a 750 or higher, you are screwed anyways.
I am not going to jump through hoops for a credit score anymore.
I am paying in cash or Bitcoin from now on!