This is a continuation of our series on low interest rates on loans for people with bad credit ratings. Today we’re discussing three individuals who have credit scores in ranging between 400 and 600 – all suffer from a low credit score for different reasons, but they all want to get approved for a consolidation with an interest rate between 6% and 8%. Note that we are publishing what these borrowers reported and we will follow up on the likelihood of their claims and the lenders they said they used.
6%, 7%, 8% Loans To Pay Off Debt for Bad Credit Borrowers
Our first post in this series “3%, 4%, 5% Loans for People With Bad Credit Ratings” went into detail on three individuals who had abysmal credit scores and were ambitious enough to buck the trend and find low interest rate regardless of their bad credit ratings. These people do exist – people who understand that their low credit score will black-ball them with major lending institutions and use the Internet to seek out lenders who will give them a low rate.
So today we are doing sort of the same thing except we have three different loans for people with poor credit with the interest rates of 6%, 7%, and 8% respectively.
6% Interest Rate for Bad Credit Applicant #1
Danish lives in the Amarillo Texas and works as a software engineer with a thriving company so his job is not a concern. However he spent way too much money on “fun stuff” without taking into account the realities of compounding interest.
He reported that he found a lender who approved his loan for $5000 to pay off some overdue bills so we will show the details of that now.
- Principal = $5000
- Interest Rate = 6%
- Length of Term = 3 years
- Monthly Payment = $152.11
- Applicant Credit Score = 520 (avg. of Experian, TransUnion, and Equifax)
Well it all looks pretty good for Danish here doesn’t it – the problem of course is he claims he was approved with an interest rate of 6% APR and at the time of his application he said he had an average credit score of 520. This should send up red flags immediately because rates that low are very hard to come by when you are borrowing cash for the purpose of paying down overdue bills – and when your credit is as bad as Danish’s was at the time it’s next to impossible.
Yet he says he did find a nationwide U.S.A based lender who gave him the loan. My first thought was 100% pure skepticism, so like we always do here at Debtfiles.com we did some research and played “the client” with the lender Danish told us he was approved with. Results will be presented at the bottom of this page for each borrower.
7% Interest Rate for Bad Credit Applicant #2
Jesús from Albuquerque New Mexico got in over his head because of medical bills. He said his mother needed three surgeries and that they didn’t have any insurance to pay for any of it. These were emergency procedures so they had no choice but to get them done immediately and though his mother did have insurance the hospital had no way of knowing the insurance company would claim she had pre-existing conditions and refuse to pay a cent.
Jesús had a bad credit score at the time and he also had his Visa card maxed out with a $3000 ceiling. The total medical expenses for his mother came to a bill of $47000 so he said he started searching for a lender to approve a loan for $50000. His credit score at the time was 430 and this ensured he was given an automatic NO WAY from all of the banks and credit unions in the Albuquerque and surrounding areas.
But alas….he too said he found lender willing to approve a $50000 loan with an interest rate of 7% and a term length of 10 years. Here are his numbers and his principal/interest pie chart (screen shots from Bankrate.com)
- Principal = $50000
- Interest Rate = 7%
- Length of Term = 10 years
- Monthly Payment = $580.54
- Applicant Credit Score = 430 (avg. of Experian, TransUnion, and Equifax)
Jesús works as for his Uncle’s auto body shop and he’s very good at his job so he earns between $4000 and $5000 a month. He also lives with Uncle so he pays very little in room & board – so he banks most of his earning each month. This is all good but he spends money like water and never really saved up a lot for a rainy day fund.
Servicing the debt on the loan detailed above would be no problem for him since the loan term length is ten year and his monthly payments are only $580.54. This all looks great and Jesús claims he found this lender online and in another State. We will get into his claim below as well.
8% Interest Rate for Bad Credit Applicant #3
Daniel in Hoboken New Jersey reported her credit score in the high 500 range and told us she was turned down by over a dozen different banks and credit unions in her area. This would have damaged her credit rating even more because every time you apply for credit your score is affected.
She needed to consolidate her Jeep loan, her credit cards, and what was left of her student loan. She had a higher than normal interest rate on her Jeep loan through the dealership at 15% APR and she still owed $26000 on it. Her credit card debt wasn’t crazy high at $2700 and her remaining student loan debt was at $65000. The total debt she wanted to consolidate was $96700 so she started looking for a debt consolidation of $100000 dollars – for which she wanted a LONG term length to keep her payments down as much as possible.
She started out looking for an interest rate in the 3%-5% range so as to keep the interest down to a dull roar. Below is the loan she said she was eventually approved for.
- Principal = $100000
- Interest Rate = 8%
- Length of Term = 15 years
- Monthly Payment = $955.65
- Applicant Credit Score = 576 (avg. of Experian, TransUnion, and Equifax)
As you can see in the pie chart above, the interest she is paying on this loan is huge even with an interest rate of 8%. Being straddled with almost $70000 dollars in student loan debt really weighs heavy on Daniel and the worst part of it is she didn’t find a job in her chosen field of microbiology. She ended up working full time for a flooring company in downtown Hoboken.
Our Research On These 6%, 7%, 8% Bad Credit Loans
We wanted to know where these borrowers were approved for their loans because there is not a chance their local PNC, Bank of America, or Wells Fargo branch was going to approve them with the credit scores they had at the time.
When we asked them exactly what website they used to find these lenders they came back with different answers but they all had one thing in common – these were private loans. With a private loan there is no real way for us at Debtfiles.com to hammer down all the facts and investigate who the lenders were for Danish, Jesús, and Daniel, but we could at least find out what website they found these private lenders with (you would think).
When they told is the websites they used it wasn’t a surprise. All three of them no longer serviceable – they were “churn and burn” sites used by criminals and none of these con artists EVER gave out a single loan. So our three borrowers were fake – just as much a fantasy as the websites they claimed to get 6%-8% interest rates from no matter how pathetic their credit scores were. This all makes sense now because people who have credit scores between 300 and 600 will never see rates this low.
Not only do the fake lender sites tell their bad credit rubes they can get an interest rate below 10%, they guarantee it! They claim they will guarantee your loan regardless of your low credit score, whether or not you’re unemployed, and regardless of how bad your credit it is – and to really pile it on they claim you can get approved the very same day that you apply on. Of course they do, because they set it up so you are enticed to give them some money before you cash their check – which bounces.
The Motive of These Bad Credit Applicants
These so-called borrowers/customers could have been the same person because this is a classic MO (modus operandi) for these folks. What they do is spread these “testimonials” around online looking for desperate people to rip off. In the image above we have a shark super imposed on a banner that reads,
“Get approved! Bad Credit? No Problem!”
But the con artists we’re talking about here today are not really loan sharks. Loans sharks are illegal lenders who charge extremely high interest rates on money they actually do lend you. The con artists in this post NEVER give funds over to “customers”. They only TAKE money from their patsies.
They bulk email their offers to millions of people claiming they can give a loan with a 3% interest rate no matter how bad your credit rating is – they also spam online forums, blog comment areas, etc. Usually they pretend to be “customers” are providing positive “testimonials” and in these testimonials they rave about how low the interest rate was on their new loan, how the term length was long, and how they were approved and funded the same day they were approved.
Inevitably they will find people who have really bad credit who reach out to them and they start their scam.
They’ll send you a cashier’s check for the amount you were wanting to borrow, but let you know you need to communicate with them before you cash it. When you get the counterfeit cashier’s check in the mail it will look something like the one you see below. Looks real doesn’t it?
Then this is where the scam can vary. They will ask you for some information or cash in some form. They may as you for a 14 digit code on your pre-paid credit card like they did here or they may ask you to wire them the funds. Usually they claim it’s just a security deposit (or some such malarkey) you’re sending them and many people with fall for it because they’re holding and official looking cashier’s check in their hands and they figure that the fee (usually ranging from a few hundred dollars to a couple thousand) is just a portion of the money they already have I their hand and it’s no sweat for them to send it to the faker/poser/scum bag.
So the poor sucker happily and excitedly runs down to his local bank branch and deposits the cashier’s check thinking he or she has finally solved all their money problems. They imagine what it’s going to be like when there are no collections agents calling, no final notices in the mail box and most of all no stress.
The feel for just a brief moment that they truly have that second chance they’ve been praying for – that second chance to clean up their act, create a budget and start anew. They feel like they’re finally out of the financial dog house and they can finally start rebuilding their credit ratings. All this euphoria lasts for as long as it takes for their bank branch to inform them that the cashier’s check is fraudulent.
Now they’re emotionally distraught again.
Their pain is obvious;
- they feel like absolute fools
- they lost whatever “security deposit” they sent the frauds
- they have another black mark on their credit record by passing a bad counterfeit check
- they’ve wasted a lot of time and emotional energy
- they’re feeling even worse knowing that their high interest debt still exists
It always amazes me how criminal have no empathy towards their fellow man or woman.
They steal their money on false pretenses and don’t lose a minute of sleep over it. Either they truly are evil or they have some unique way of justifying their actions and there is never a shortage of desperate people to abuse in this same way.
Whenever you see an email, comment, or testimonial online claiming that they know of a lender who is “the real McCoy” who lends money to people with bad credit AND at ridiculously low interest rates you know it’s NOT real.
If you have bad credit a “ridiculously low rate” would be anything under 10% APR. Depending on whether or not you have a co-signer, home equity, or some form of collateral asset – you will be approved if your credit rating and credit history are within acceptable ranges according to the lender you’re dealing with.
We actually know of a victim who was defrauded TWICE with same basic scam. This is how badly some people want to believe they’re eligible for a debt consolidation loan at prime rates. It’s NEVER happened and never will happen.
If you have a credit score like the people above (between 300-600 FICO) your only hope of a guaranteed approval is if you have a co-signer and/or you have collateral the bank just can’t roll their eyes at. And if you have all this then you would never be searching online for prime rate loans.