2006-09-01 16:03:28 · 6 answers · asked by chielle 1 in Business & Finance ➔ Personal Finance
Easy.
They do a "consolidation" loan for you, and "negotiate" that you only have to pay 50% of what you owe, and then 25% for their "fee".
In reality, the companies they settled with would have settled with you for maybe even less, and you are paying them on top of it, and your credit is still ruined.
The worst lending company is the "paycheck forwarding", where you write them a post dated check and they "charge" you - if you add up the interest rate for that "one week loan", you're paying sometimes 120% annual interest - it should be illegal, but since they call it a fee and not interest they get away with it. The problem is those are the least people who can afford that kind of gouging.
2006-09-01 16:08:10 · answer #1 · answered by Anonymous · 0⤊ 0⤋
2
2016-07-24 22:06:23 · answer #2 · answered by ? 3 · 0⤊ 0⤋
They lend money to high risk people. This sounds risky, but they just charge more money in interest than they lose in nonpayment by clients. Since they are already in a high risk area, the ratio is higher, and they work the numbers. When lending on housing, they can foreclose the house, resell it for the same original price or higher, and the buyers lose any equity they have paid up. Usually, they would also sell with a high interest rate, high closing costs, knowing that the buyer is in an area where they will lose their job soon, for example.
2006-09-01 16:08:05 · answer #3 · answered by auntiegrav 6 · 0⤊ 0⤋
By lending money to people with such bad credit that they don't have any choice but to accept the insanely high fees or interest rates. But no one is putting a gun to anyone's head and making them take out loans with these companies.
2006-09-01 16:07:42 · answer #4 · answered by Vadalia 4 · 0⤊ 0⤋
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2016-07-07 21:48:34 · answer #5 · answered by Anonymous · 0⤊ 0⤋
by scamming people on the net and in real life . very simple they take advantage of people who are not savvy to life and its pitfalls .
2006-09-01 16:07:08 · answer #6 · answered by Anonymous · 0⤊ 0⤋