There are legitimate lending institutions that actually specialize in loans that are more than beneficial to itself, whereas the borrower gets the raw end of the deal. A good example of this is a lending institution that deals only in car title loans, these are actually the type of lenders you should avoid, granted that lending companies are at an advantage when it comes to profit, these companies thrive on a borrower’s desperation. A lot of these lending companies are legal in nature but even in the most desperate situation, these companies should be avoided.
Before entering into a contract with these financial companies it would be best to actually exhaust all options and even then think more than twice as these are the type of lenders you should avoid.
- Car Title Loan Lenders – These types of lenders charge an exuberant amount as they would take your automobiles papers and loan you about 25 – 50 percent the total value of your vehicle and if you should default in repaying these companies re-possess your vehicle and sell making a very tidy profit from the amount and interest that you have already paid and profit from the sale of the vehicle.
- Cash Advance Loans – Although banks and credit card companies carry this type of loan and are as legit as they come, they are also at times guilty of over profiteering off borrowers since cash advances usually have a 3% – 5% interest over the regular loan interest and starts once the money is withdrawn
- Pawn shops – One of the type of lenders you should avoid are pawn shops as these types of institutions give low appraisals, have high rates and a minimal time frame to repay your loan and redeem the item you have pawned in (i.e. jewellery, watches, or anything with value). Aside from the interest, there are also add-on fees to these interest, most of the time in the form of storage fees, Service fees and at times fees for lost pawn tickets.
There are also lenders that only appear to be legitimate. When in truth, these are just scam artist out to really take advantage of a borrower’s desperation. Now, these are the types of lenders you should avoid totally. As these scammers would find a way to extract from the borrower what they already don’t have cash.
Usually, they ask for a deposit to show ”good faith” or as a “down payment” for a loan that will never materialize. A tell-tale sign of this is that the scammer is not interested in any documents not even in a borrower’s credit history, wherein there lies the evidence that the borrower can repay the loan.