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’llĀ  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.

1 Comment on Why You Shouldn’t Get an Internet Loan

  1. Thanks for pointing this out. I had never considered an online loan, but just assumed it was structured the same way “brick and mortar” institutions would. The digital age, to me, has really “devalued” people’s view on money. Nowadays, we don’t even see most of what we earn or what we spend; direct deposit and online banking have allowed us to stop worrying about the details of our finances, and we only care to look deeper when a problem arises, which sets up very nicely for financial predators. Sometimes the convenience of the internet can make things truly “too good to be true.”

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