Case study #5: poor credit cash loans
This case study about poor credit cash loans is shared to me by my friend who was in this business a long time ago. This case study is an actual true story, and I have included it to better show you the effects of one common technique that many lenders use. If you would like to read more on this first, please click on page 12 from the navigation menu below to understand the basics of this case study before learning more about there poor credit cash loans.
This case study is about one person, who we will refer to as Mike. Mike had an addiction with gambling and drinking. He had a minimum wage job, but because of his addiction, his wage was not enough to cover his expenses and his lifestyle. One day, Mike went to the loan company at which my friend works. He applied for one of those poor credit cash loans. Mike applied for a loan of $1000. Considering the low amount, his loan was approved very quickly, with an interest rate of 18% for 10 months. That meant that he would need to pay them back $280 every month for ten months.
In most cases, people are able to handle a low amount loan like this without any incident. But due to his addictions, he was left with no money by the end of the month. Because he was unable to come up with the loan payment, Mike thought of a method in which to help settle his debt. He went to a different loan company and applied for bad credit cash loans. He took out a loan of $3000 with an interest rate of 19% for ten months. The reason why he took up the second loan, is to clear the debt from his first loan. Because of his current credit crisis, the only type of loan that he could apply for was one of those poor credit cash loans and bad credit cash loans.
Mike was worried about the loan company finding out about his first loan, so he applied for poor credit cash loans. But what Mike was unaware of was that the second company he was borrowing from had already contacted the first company which my friend was working in. Although many think that bad credit cash loans means that they don't do any credit background check, that is far from the truth. Those loan companies share customer information with each other to determine whether or not to approve a person's loan. Looking at his first loan, the second company gave him a loan with a slightly higher interest rate. In this case it is higher than the previous one by 1%.
Mike took that $3000 and settled his debt for his first loan of $2800. Mike must have felt good about himself for thinking of such a good plan, but eventually, I am sure he noticed the situation he was suddenly in. For the second loan of $3000 with an interest rate of 19%, he would have to pay $870 every month for ten months. With a grand total of $8700. Unable to come up with that amount, Mike went to a third loan company to apply for another bad credit cash loans. To settle his second loan, Mike took a loan for $1000 with an interest rate of 20% and for ten months. He used that money to settle the one month payment for his second loan.
But now, his two poor credit cash loans had again increased to a point that was impossible for someone with his wages, to settle. Although he had taken up a third loan, it was used to pay for just one month's payment for his second loan. He still had to pay $870 for another nine months. And to make matters worse, his third loan would mean that he had to pay an additional $300 every month for ten months, to the third loan company. That meant that Mike had to come up with $1170 every month to settle his debt. Mike knew that he was already in serious trouble over his bad credit cash loans, but he still tried to get a fourth loan from another company. But this time, his loans were all rejected. It didn't matter which loan company he went to, they all rejected his application.
It also didn't matter if he tried to apply for one of those poor credit cash loans or those bad credit cash loans, every single type of loan was rejected. Once your name has been entered into the loan companies blacklist, they will distribute that list to every loan company that has connections with them. Reasons for being in the blacklist can range from, not paying the debt, running away from them, and also using this method of taking a loan from one loan company to pay another. The reason why no one would now approve his loan was because all the loan companies now had information on his financial status, which showed the loan companies that he would not be able to pay back their loan if they approved one for him.
Now, Mike was in over his head, and way over his financial capabilities. Because of his addiction to gambling and drinking, he applied for a loan of $1000. But because of using the method of using taking up a new poor credit cash loans to clear another, his debt was now ten times more than the first amount he borrowed. He had to pay $870 for his second loan for another nine months which comes up to $7830. And his third loan meant that he also needed to pay $300 for another ten months after which the amount would be $3000. That meant that Mike would have to pay the loan companies a total of $10,830. And all that for just one $1000 loan. I will not go any further and tell you about what happened to Mike, but I will just say that he had to give up his life of gambling and drinking and even after four years, his debt has only gotten larger.
The problem with this method is that there are many people who use it. They can't afford to pay the loan for one company, so they apply for another loan from a different company to settle their initial debt. For Mike's example, he only had to take up three different loans and his debts increased by ten times the initial amount he borrowed. Many people only figure out about the downside of this method when it is too late. By then, most people have a debt that are over their financial capabilities.
Many people still do not know about the downside of this method, and that is why I am sharing this information with you. If your loved ones or anyone you know is using this method, please advice them and show them the horrible downside from using this method. So that the next time someone applies for poor credit cash loans, they will not fall into this dangerous situation.
-----------------------------------------------------------------------
Return to Loan Scam main page
Please click on the link above to learn more about how those scams work
If you are having problem with poor credit cash loans, learn how you can earn a little extra income to reduce your burden