3 Common Loan Traps That You Should be Wary of in Irvine, CA.

3 Common Loan Traps That You Should be Wary of in Irvine, CA.

Loan traps can rumple your financial health. Loan traps are typically hidden by an honest and reputable veneer. If successful, they’ll exploit your financial situation for their benefit. Your finances are the cornerstone of your life, so a loan trap is particularly ruinous. Here are some common loan traps that you should avoid.

Car Title Loans

Car title loans are short-term, have triple-digit APRs (annual percentage rate), and prey on people with poor credit. Typically, these loans entail collateralizing your vehicle by giving your vehicle’s title to a lender in return for a short-term (around two weeks) loan.

If you default, the lender can take your car. These loans don’t seem predatory due to their short duration. However, that short timespan masks the fact that their APR can reach triple digits. In comparison, credit cards and personal loans tend to top at APRs of 30% and 35%, respectively. There are other safer ways to acquire short-term cash than car title and payday loans (more on that ahead).

Payday Loans

A person who has pulled their pockets out, suggesting that they have no money

Payday loans are similar to car title loans in structure: they’re short-term, they typically prey on people with bad credit, and they have triple-digit APRs. These are predatory for the same reason as car title loans. Once again, the short duration hides the loan’s APR, which can reach up to 391%!

Thirteen U.S. states have recognized the threat posed by these loans and have, accordingly, banned them. The fact that the authorities have taken notice is a clear indication of the risk that these loans pose to borrowers.

Credit Repair Services

These aren’t inherently loan traps. Unlike car title and payday loans, which are predatory by design, predatory credit repair services act as fronts for loan traps and scams. The FTC has reported that scammers have carved out a space in the credit repair industry, but they’re far from dominant.

Fortunately, it isn’t too hard to spot an unreliable credit repair company. Firstly, examine how ambitious their claims are. If a credit repair company claims something like “we’ll legally craft you a new credit identity,” they’re definitely going to scam you. Secondly, do your own research. You’re probably not the first person contacting a credit repair company, so you can probably find a review of someone’s experience with the company. Anecdotes are a simple way to check if the company you’re contacting is reliable.

You can expedite that research and examination process by getting in touch with 007 Credit Agent. They offer a free consultation with a credit repair expert, so you can verify their expertise yourself. They’re a credit repair consulting company that provides credit repair services and programs in Irvine, CA. Get in touch to get reliably improve your credit score.

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