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If you need a debt consolidation or debt relief your best bet is with NDR.

3%, 4%, 5% Loans for People With Bad Credit – NOT

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All three of these people with bad credit claimed they were approved for interest rates between 3% and 5%. We get a lot of these kinds of borrowers who want low interest rates to pay off bills in a debt consolidation loan but we’ve only ever “heard of” people getting approved with rates when they have bad credit scores.

When I put “heard of” in quotations it’s because we’ve never actually seen it in writing on official letter head from an established and reputable lender. Our staff at manage 5 different financial sites that where we receive lengthy submissions from borrowers who have bad credit scores. We receive them via email or by pre-applications and these folks are almost always have poor credit and they’re desperate to find a low interest loan to consolidate all their bills.


But around 1-2% of these submissions the borrowers are simply telling us about how they were approved for their bill consolidation loan(s) and how they we’re approved with rock bottom rates. The only problem with that is these people had BAD CREDIT and in the world of consumer finance legitimate and licensed financial institutions never approve loans with rates that low.

So how could this be you ask?

Read on….

Bad Credit Loans With Interest Rates 3%, 4%, 5%

Personally I can only think of two scenarios where someone with a horrible credit score (I’m talking FICO scores ranging from 300-450 here) could get approved for a loan at an interest rate lower than five percent.

1.) they borrow money privately (usually a family member)

2.) they can secure the loan easily with an asset, and even then they wouldn’t get a low rate

So we are going to journal all three of these customer consolidation loans and the rates our users claimed they were offered. The first consolidation is for $10000 with an interest rate of 3%, the second a $20000 loan with a rate of 4%, and the last being a $30000 loan with a rate of 5%.

Keep in mind that when state they were approved for interest rates between 3% – 5% we’re only reiterating what they claimed and not what WE know to be true.

Once and while we’re told that a borrower was approved for a loan at a rate of 3% AND they have bad credit. The claimant goes on to say that their credit score was in the 400 – 500 range at the time of the loan application. But when we dig deeper in to their claim we find out they were not being truthful and what they were really doing was making the story up in an effort to dupe honest people into using “the same lender they used” to get approved. And guess who that “lender” is – yep……it’s the same people who made the big brag on getting approved for the ridiculously low rate.

So as per normal on the Internet you have to question everything you read and dig deeper to find out if the source is a credible source, or the lender is a credible and legitimate lender.


It’s not difficult to protect yourself from loan scams really – just make sure you never give anybody a single solitary penny upfront. Real and reputable lenders never ask you to give THEM money – you’re supposed to be borrowing money FROM them.

I know that some of these scam artists are very convincing and it’s human nature WANTING TO BELIEVE tall tales when you’re hearing what you want to hear, but you have to always have your guard up enough to check all lenders before you do business with them.

Examples of Bad Credit Loans with Interest Rates 3%, 4% and 5%

So lets get to the data of these borrowers who say the found low interest rates on their consolidation loans regardless of their low credit. To make it simple we chose borrowers who applied for loans in the amounts of $10000, $20000, and $30000.

$10000 Dollar Consolidation Loan – Bad Credit @ 3% Interest Rate

Our first borrower Angelia said she got a loan to consolidate all her credit cards for a principal of $10000. She had a bad habit of spending money in bars and once she had a few drinks she really started heating up her Visa card and MasterCard. At one point she actually DID have good credit and that is why she got her credit card limits both up around $5000 – the problem was she lost her good paying job and she never changed her spending to make up for the shortage in earnings.

She did find another job but it didn’t pay nearly as much and there was no way of increasing her income unless she got another job – in the mean time she had to get a move on with a consolidation loan so she could pay back the credit card companies and start from scratch again.

She said she looked in her local area for a private loan but there was no such thing to be had when you don’t have any home equity or a vehicle to use as collateral. She had some music equipment but not $10000 worth and the banks wouldn’t have accepted that as collateral anyway.

She tried finding a co-signer but that was also to no avail.

Then she told us she gave up locally and started searching Google, Bing and Yahoo for answers. First she had to learn what terms like “consolidation” and “principal” actually meant. But within a month she knew what she was looking for and she knew how to find it.

Breakdown of 3% Debt Consolidation Loan

Below you can see the math on her 3% debt consolidation loan – take not of the monthly payment because that is going to be what changes in the different calculations.

  • Principal = $10000
  • Interest Rate = 3%
  • Length of Term = 5 years
  • Monthly Payment = $179.69
  • Applicant Credit Score = 423 (avg. of Experian, TransUnion, and Equifax)


See that the monthly payments are $179.69 and they show the length of term in months instead of years.

She claims she got a rate of 3% but we find that highly doubtful so we have included below what we think her rate would really be if she were ever to be approved.

  • Principal = $10000
  • Interest Rate = 24%
  • Length of Term = 3 years
  • Monthly Payment = $392.33
  • Applicant Credit Score = 423 (avg. of Experian, TransUnion, and Equifax)


What do you see different in this picture? Three things = 1.) the interest rate is not 3% but 24% and 2.) the term in months is 36 (or 3 years), and 3.) the resulting monthly payment is drastically different (of course) at $392.33.

We include this math as a reality check to that we can show what you are really up against in terms of interest rates when your credit is really bad in the score range of 400 -500.

Angelia still stuck to her story vehemently denying she was being untruthful. In fact she even provided us with the lender she said approved her loan with a 3% rate.

So we contacted the lender to find out for ourselves and they declared that they will approve people with bad credit for loans at a rate of 3%. But of course they do!!

So we went further and faked them out. We had an associate apply for loan stating their credit score was really bad and that they wanted a guaranteed loan approved the same day as the application was submitted. Well lo-and-behold they said that wouldn’t be a problem!

They just needed her (one of our authors) to make a deposit of $500 to secure the loan and pay for administration costs.

BINGO! Ladies and gentlemen we have a fraud – a criminal organization fleecing financially desperate people for a dirty profit. So Angelia was not a real applicant and the 3% interest rate was not a real loan.

This lender is now nowhere to be found online.


$20000 Dollar Consolidation Loan – Bad Credit @ 4% Interest Rate

Now we’ll move on to Boris from PA who was in money trouble and it was coming at him from all fronts. He was so desperate to get all of his bills and credit cards paid off he was willing to accept any interest rate. But why not “settle” for a 4% interest rate!

That is exactly what he was offered on a website claiming to guarantee the approve of his $20000 loan by the end of the week. Once again, the reason we included Boris in our top three borrowers for low interest rate approvals is because he absolutely told us he WAS approved even though his credit score was in the 550 range.

But unlike Angelia above we never did find evidence that he was lying about his approval. More on that later.

Boris had approximately $12000 dollars owing with several different creditors and the remaining $8000 owed to his Discover Card and his Visa card. He was actively seeking a loan at a rate that was much lower than his current rates in the 20%-25% range. He was extremely determined to find a lender in his area that would allow a really low rate regardless of his credit rating. He thought that if he search long enough online he would find that special private lender.

Boris approached his search by focusing on private lenders – he knew the banks and credit unions in his area would not approve him.

And he was right.

Banks and credit unions will never lend money unless it’s secured in some way or another. You basically need money to borrow money and the banks provide low interest rates to customers who have long standing credit – excellent credit.

Searching For Loans Online Is More Difficult

Google has been trying to provide only legitimate lending institutions (or major blogs) in their search results related to personal finance – so as a result mostly banks and credit unions are displayed on the first and all of the content is accompanied by Google’s ads top, bottom, and right hand side. So Boris ignored the first few pages of results and focused on the websites offering exactly what he was looking for.

He knew that he had to find a rare lender that approved loans to people based solely on their ability to earn a monthly income. Whether that income is SSI, pension, or employment income didn’t matter – the lender has so approve you on your job and not your credit rating. This is why his chose private lenders as his target.

Bad Credit Approval with a 4% Interest Rate

Below is what Boris said he got approved for:

  • Principal = $20000
  • Interest Rate = 4%
  • Length of Term = 5 years
  • Monthly Payment = $368.33
  • Applicant Credit Score = 510 (avg. of Experian, TransUnion, and Equifax)


And what most lenders would have charged in interest:

  • Principal = $20000
  • Interest Rate = 23%
  • Length of Term = 3 years
  • Monthly Payment = $774.19



$30000 Dollar Consolidation Loan – Bad Credit @ 5% Interest Rate

Joyce also had a bad credit rating just below 600 when you take into account Experian, TransUnion, and Equifax. Her total debt was an even $30000 (so she stated – because of divorce and general disarray) and she wanted to get approved with a nice low interest rate so that she could start all over with a fresh start. She claims she was approved with an interest rate of 5% and we weren’t about to call her a liar.

We have to at least have some faith in the people communicating with us – to some degree, BUT there are a lot of shady characters in the online loans world. Finding the real legit companies is essential if you want to be able to sleep at night.

Joyce tried getting approved with the Bank of America branch that she’s been doing business with for over 20 years and that didn’t go so well – she denied flat out for any kind of financing including a debt consolidation loan.

This was deeply disappointing for her and it hit her really hard – she was under enough stress going through her separation and divorce proceedings so she didn’t need even more stress piled on. She was fighting for custody of her children and the legal costs had drained whatever savings she had put away from working at Walmart part time as a till operator.

All she wanted to do was combine all her credit card debt and other debt into one big debt and have a low monthly payment – and in order to get this low payment she needed to things to happen;

1.) she needed a low interest rate

2.) she needed a longer term (length in months and years

She wanted to get a 10 year consolidation loan at a rate lower than 7% but of course we were very sceptical. But she said this is why she wanted to find a private lender, and she went as far as to say she wanted to use a loan shark. We informed her that loan sharks do not just give out loans for interest rates lower than 7% – they give loans at illegal usury levels and that’s often higher than payday loan company rates.

So with this mind she started her online quest for lending in earnest. She came across a company that promised her a low rate of 5% and for a 10 year term length. Ridiculous but she fell for it anyway, sending the fraudulent company a “security deposit” – oldest scam in the book right!

Joyce’s Dream Loan for $30000 @ 5% Interest

So IF SHE ACTUALLY did get approved at 5% APR for 10 years this is how it would look.

  • Principal = $30000
  • Interest Rate = 5%
  • Length of Term = 10 years
  • Monthly Payment = $318.20
  • Applicant Credit Score = 600 (avg. of Experian, TransUnion, and Equifax)


As you can see at 5% she would have a reasonable monthly payment of approximately $320 dollars for the 10 year period. The only problem is that financial institutions don’t usually approve debt consolidation loans for terms this long, and they certainly don’t grant 5% interest when the borrower/applicant has a credit score below 600 with the major credit reporting agencies.

Below is a was a legitimate lender would likely do EVEN IF YOU HAD A CO-SIGNER:


Author’s Note:

It was hard to see these people with low credit scores desperately hoping they would somehow get approved for a debt consolidation loan at extremely low rates in comparison to their credit scores.

We did manage to prove that in the first case with Angelia that the lender was a fraud and not to be taken seriously by any borrower. She was spared the loss and humiliation of getting ripped off but in so many cases there isn’t anyone there to tell them the facts of reality.

They end up being victims of loan scams or at the very least become loan shark bait – in any case whenever a lender or a website claims to provide low interest loans for people with terrible credit ratings they should be immediately suspect.

When you see these kinds of claims you should expect the “lender” will be asking from some kind of upfront fee. They will often use the pre-paid credit card scam to trick people out of their money. Read here for more on this kind of abuse.

The truth is that with legitimate and licensed lenders your credit score will dictate what your interest rate is going to be. The only real way you’ll get approved for a loan with a credit score below 600 is if you have an asset for collateral guaranteeing the bank they’ll get their money back. Even if you do have a co-signer and collateral you won’t be getting a low rate like the claims above.

Hope this helps bring some clarity to the discussion.

If you need a debt consolidation or debt relief your best bet is with NDR.

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