Case study #6: bad credit low income loans
This case study about bad credit low income loans will show you some very valuable information about why and how those loan companies created this types of loan and how they stand to take advantage from it. The information here is shared from a friend of mine who was in this business a long time ago. After reading these this information, you will understand how many of these bad credit low income loans work, and the dangers that they pose.
Legal financial institutes and banks also don't have the leniency that those loan sharks have when it comes to bad credit low income loans. That is because most banks and legal financial institutes know that many people will face difficulties in settling their debts. So why is it that those loan sharks created and approved so many loans of this type? It would almost seem that they are really out there to help people. Well, almost is still far from being the truth.
Illegal loan companies or loan sharks, created thess type of loans because it relates to their main goal. Their main goal is to earn money, straight and simple. But how do they achieve that? Simple, by giving people loans that will take a very long time to pay off and in some cases, even impossible for some. Most loan sharks makes lots of money not in the short run, but the long run. Yes, they do make lots of money in the short run, but the amount they make in the long run can shock many people and even banks!
People who are able to pay of their debt without any delays and problems contribute to the loan shark's short term goal. But people who face difficulties in paying their loans, will almost always have their interest rates and payment increased by those loan sharks through various different methods. It is very common for someone who have borrowed $1000 from them, to end up paying them that same amount for every month. I will show you an example of such a method in the next case study, but for now I will just stick to why they use bad credit low income loans.
As I've mentioned above, their main goal is to get people to owe them money that will take a very long time to settle. And almost always, it means having someone taking a loan that is way over their financial ability. Once someone has problems paying of their loans and even miss one month's payment, the loan sharks can easily increase the total debt, the interest rates and even the payback period. But to make sure that they are able to implement all that, they will first need someone to take a loan that is beyond their ability.
That is where those bad credit low income loans comes into the picture. People who apply for this types of loan usually mean two things. First they are not financially stable in terms of jobs and salary, or else they wouldn't be applying for such a loan. These are people who do not have a good financial background. The second is because that those applying for these loans have are in bad financial status due to debts, or else they would apply for a normal loan. These are people who have a good monthly income or business, but are currently hitting a slump. In both cases, these people will not have a high chance of getting their loan approved from the banks.
The people in the first category will have a much higher chance than normal people or getting a loan that is over their financial ability, and thus they have the highest chance of getting loans that will need a long time to settle. Although most loans for people in this category are usually not large. People in the second category have a much higher chance of settling their debt. But because these type of people tend to borrow a substantially larger amount, even if only one or two are not capable of paying back their loans, it will mean a large profit to those loan sharks.
These are all real strategies that most loan sharks and illegal loan companies use when they created those bad credit low income loans. The dangers that can come from these types of loans are very real and I am afraid to say, very common. Please read the next case study to learn from a real life incident where this particular situation happens and destroy one person's life.
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