So today we’re going to delve deeply into these borrowers and the lenders that claim they guarantee approval to anyone with poor credit who wanst to consolidate all their bills into one stupidly low monthly payment.
Unfortunately there is an entire industry of shady so-called “debt consolidation companies” who wave the big carrot of a guaranteed consolidation in front of people who have really bad credit scores.
I remember my grandfather saying,
“Guarantees are like unicorns….they don’t exist and they have pointy horns sticking out of their heads”.
I never understood what he meant by that – but now I know he had a great sense of humor and this joke fits perfectly for the “guaranteed loan” subject. I love the irony in his comment too – first saying that something doesn’t exist and then describing a physical feature on it. Classic Gramps!
And why this fits the lending vernacular so well is because not only do guaranteed loans not exist, the search for them could actually hurt you.
So let’s start with the truth shall we – and it’s going to get murky.
Guaranteed Debt Consolidation For People With Bad Credit Doesn’t Exist! (…or does it)
Even if you have a decent credit score there is no guarantee that you would be approved if you walked into a bank or credit union asking for a consolidation loan, and if your credit rating is really bad you don’t stand a chance. This is of course only true with reputable financial institutions.
Now if you want to get into the weeds on this you can always find some kind of loan shark to lend you the money you need. They will be LESS than reputable and they will be MUCH less than honest. They will charge you illegal APR (annual percentage rate) and they will slap you with huge penalty fees if you dare miss a payment or be late with a payment.
And further down in the underbelly of illegal loan sharking there are true mob connected criminals who will lend money to anyone and they’ll destroy you and/or your family if you don’t “pay the vig” to them on time and in full.
These kinds of high risk loans are often called “hard money loans”, but in reality they are nothing of the sort.
A hard money loan is a legitimate and legal financial instrument used in the private lending world. The loan is approved based on a real asset (usually real estate) for a short amount time. An example would be Company A borrowers money from Company B using property they own as collateral.
So lets get out of the weeds……or should I say water.
When We Say Guaranteed Consolidation We’re Getting Personal
Generally speaking when we talk about a guaranteed debt consolidation we’re referring to loans for individuals and not companies or corporations. We’re talking about everyday average people who want to simply consolidate all their bills into one small payment with the LOWEST possible interest rate. If the borrower has bad credit he or she will happy with just a decent rate.
So for the duration of these files we’re only exploring individual consumers’ quests to consolidate their high interest debt (usually credit card debt).
Below we lay out three different files from people in the United States that were desperate to consolidate their debt – and they wanted it done FAST!
Fast meaning they wanted the funds transferred into their checking for savings account on the same day that they applied for the loan. I know that sounds implausible but there are shifty companies out there on the Internet who claim they provide same day funded loans.
3 Examples of Guaranteed Bad Credit Consolidation Loans
So we chose three different people we have on file who had really bad credit ratings and scores. All of them wanted to consolidate credit cards and bills. No student loans – mostly just credit cards and bills.
This is VERY common.
We will protect the privacy of all these people by changing their names and not specifying where they live in the United States. Some people we have on file don’t mind sharing their entire story with their real names, but most don’t want to air their dirty laundry on the Internet.
How can you blame them.
For each file we will include the interest rate they wanted and were offered by shady lenders, and then we show the same example with the realistic numbers. When someone’s credit score is really bad the realistic interest rates can be almost as high as their credit cards – this is when you need to decide between a debt consolidation loan or a debt settlement – two completely different animals.
#1.) Guaranteed Debt Consolidation with Bad Credit $15000
Our first file is for Shania who was 22 years old at the time of her financial predicament and wanted a lender that would guarantee she would be approved for a personal loan in the amount of $15000 to pay off all her credit cards and her Verizon bill.
She had a full time job in a nightclub which paid fairly well after you included her tips. The problem is that tips come in cash and by the end of the night it’s gone.
Sort of an easy come easy go situation, except for the fact that it’s NOT easy to do an 8 hour shift slinging booze and getting your ass pinched.
Money was literally slipping through her hands and that’s understandable when you are in a club atmosphere, you’re young and pretty, and you’re surrounded by other young friends who want to party.
We suggested to Shania that she start saving her tips and find ways to entertain herself that didn’t involve spending money.
Shania was offered a $15000 debt consolidation loan with a 9% interest rate. Of course the company that offered that told her she was guaranteed approval and of course they asked her to pay an fee up front. THIS IS NOT a legitimate lender so if you ever see this run for the hills.
But for the sake of argument let’s calculate this mythical loan.
Mythical Guaranteed $15000 Debt Consolidation Loan:
- $15000 principal
- 5 year term
- 9% interest per year
- monthly payment $311.38
Realistic Guaranteed $15000 Debt Consolidation Loan:
- $15000 principal
- 5 year term
- 21% interest per year
- monthly payment $405.80
#2.) Guaranteed Debt Consolidation with Bad Credit $20000
Now this consolidation was for $20000 and sort of the same scenario in that Allan wanted was looking for a lender that would guarantee him he was going to get approved regardless of how bad his FICO was.
He found some online companies that offered the stars and the moon of course – they asked him if an interest rate of 5% was acceptable!
He said, “Of course…..sign me up please!!!”
The problem is that they try to entice borrowers with an outrageous interest rate regardless of how bad the applicant’s score is and once they have you on the hook the rate changes drastically – so high it breaks usury laws in your State. Classic online loan sharking.
Allan was so desperate to get a consolidation loan approved he went along with the scam until he found the rate they offered him wasn’t really any better than his credit card rates were.
In the end he ended up signing up for a debt relief program. He couldn’t find a rate that was lower than the rates he already had on his cards. Below shows what he was offered by most lenders.
Typical $20000 Debt Consolidation With Bad Credit:
- $20000 principal
- 5 year term
- 18% interest per year
- monthly payment $507.87
#3.) Guaranteed Debt Consolidation with Bad Credit $30000
For our third example we have Ashley who wanted a $30000 dollar consolidation due to a car loan, credit cards, medical expenses, and court fines. She and her common-law husband wanted to get this looked after as soon as possible because they had a really bad year and the stress was brutal at the time.
They were getting constant phone calls and mail from collection agencies harassing them viciously to pay the money they owed. Her hubby was recently unemployed and mortified that he couldn’t help out with Ashley’s debt problem. He was actively seeking employment every day when Ashley was in the middle of trying to find a willing lender for her consolidation.
They tried getting approved online, with local banks, and then local credit unions. They tried to find a co-signer and they tried family members because they didn’t have any collateral and no home equity. They had one old vehicle and that would never be enough collateral to get her approved for a $30000 note.
In Ashley’s case she never did find a guaranteed debt consolidation plan. They really didn’t have a chance when you looked all the details so she ended up doing a debt settlement with her creditors. She chose to go it alone and negotiate with all her creditors directly instead of using a debt relief service such as NDR.
This can be done but it will hurt your credit rating even further so understand that going forward if you have a really bad credit score. Usually though, if someone is at the point Ashley was at their credit score is so bad already it doesn’t matter.
Below shows what the loan sharks offered her and following that we show what she wanted in the first place.
Loan Shark $30000 Debt Consolidation Loan:
- $30000 principal
- 5 year term
- 23% interest per year
- monthly payment $845.71
Legitimate $30000 Debt Consolidation Loan:
- $30000 principal
- 5 year term
- 10% interest per year
- monthly payment $
Notes From Author
So these are the kinds of situations we see and hear about all the time. People who have nowhere to turn to – with no financial support from family when they’re in dire straits, no help from financial institutions when they really need money help.
It’s sad and it’s frustrating, and I wish I could help everyone who comes to our site looking for help, but the only help I can give is a debt freedom plan.
At some point in our lives we HAVE to take full responsibility for our finances. I’ve personally claimed bankruptcy and that’s what led me to start Debtfiles.com – I realized that I was far from being alone in my struggles and there were millions just like me.
I was ashamed and embarrassed. I didn’t want my family, friends, or coworkers to know that I was a complete screw up. I swore I would never be in that situation again.
I went from getting a personal loan for debt consolidation to signing up for a debt relief service and ultimately bankruptcy. Talk about stressful and painful!
I had to completely change my lifestyle so that I was finally sticking to a budget and finally “getting realistic with my money. I found out that life didn’t suck when I was spending very little on non-essential items.
Never Beat Yourself Up Because of Money Problems
Whether it’s because of your own frivolous spending or because of bad luck (health or accident caused) it’s all the same feeling.
You feel lost and helpless and you need to stop this – you need to realize that it’s NOT the end of the world….it’s the end of over spending.
Remember that you can always start over and rebuild your credit step by step. Just take those baby steps one day a time and slowly rebuild.
Find activities that are relaxing and fulfilling that don’t cost a penny. There are many things you can do that cost you nothing and you never need a credit card to have a lot of fun.
If you have a passion for a particular activity then ask yourself if that activity is so important it’s worth suffering debtor’s stress over.
I know from experience that it’s NOT worth the stress – you can give up any dream or hobby if it means staying financial sound.
Here is a nice post called 6 Steps to Overcome Debtor’s Guilt.
So in closing…..guaranteed debt consolidation loans don’t exist……and they have sharp horns sticking out of their heads.