Lenders who do not require credit checks seem too good to be true. That’s because they are. These offers are as predatory as payday loans. “Installment loans,” are also something consumers need to beware of. These loans come with extremely high interest rates, often more than 200%, and lenders do not consider a borrower’s ability to repay the loan. A paycheck and a bank account are usually all you need to qualify, because lenders withdraw payments electronically, often relentlessly.
It’s no wonder borrowers frequently default or get trapped in new loans. Consider this: One lender advertises a $2,600, 18-month loan at 187% interest. That would mean a borrower would repay almost $8,000!
Borrowers usually have low incomes and limited access to traditional forms of credit, according to studies by the Center for Responsible Lending. Installment loans may seem like a good alternative compared with payday loans, but the exorbitant interest rates make them more harmful in the long run. Some lenders tack on additional fees, like credit insurance, that drive up the cost of these loans even more.
The increase of these predatory loans have gotten the attention of the U.S. Defense Department that recently expanded regulations to cap the interest rate on all loans at 36% for military members and their families.
There are safer alternatives to no-credit-check loans and installment loans. If you are in need of cash and have poor credit, your local credit union is a good option. Most credit unions offer small-dollar loans of $500 and above, and they are often willing to work with you to make the payments affordable, even if you do not have the best credit. Many also have starter credit cards or loans to help you build a credit history. The interest rate charged by a federal credit union is capped at 18%.
If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources: http://www.nerdwallet.com/blog/loans/no-credit-check-installment-loan/