Is there anything worse than credit card debt? Yes, internet loans! If you come across an internet loan company, run the other way! Why am I talking about internet loans? Because more people nowadays are borrowing money online.
To many of us who are stuck in a mountain of debt, getting a giant check to pay off debt seems very appealing. Don’t do it! Internet loans, just like credit cards, are unsecured loans. That means you don’t have to put up any collateral, property that you promise to a lender, to secure repayment of a loan. Since loans without collateral are high risk to lenders, they charge you an extremely high interest rate to compensate for the risk they are taking.
The last time I checked, one Internet loan company was charging 139.34% APR on a $2600 loan! If you took out a loan like this, it would take you a very, very long time to pay it back. The interest alone, in one year is $3,622.84! You’ll end up paying the $2600 that you originally borrowed, many times over.
This is a trap so don’t fall for it, no matter how desperate your circumstances are. My guess is that the interest rate is so high because in these tough times, people are borrowing more to make ends meet. And I’m betting that they are not looking at the interest rate or reading my blog.
It is better to stay with your credit cards. The interest rate for credit cards will never be as high as an internet loan. We may complain about credit card debt, but internet loans are far worse than credit cards.