Sep 9 2017

Guaranteed High Risk Personal Loan #loan #calculator #canada

#guaranteed personal loans

1. Guaranteed High Risk Loan at 13% APR over 5 Years for $5000

This is a typical high risk loan for $500. The borrow had a FICO of under 600. Being a 5 year lending term the borrower was lucky to even get an interest rate as low as 13 percent over the principal.

For this calculation we ll use our loan calculator found on the right hand side of our page. We enter in the loan amount 1st, the interest 2nd, the years of the term 3rd, and the periodic payment frequency last. So this case study the numbers played out as; $5000 = Amount/Principal, 13% Interest Rate, 5 Year Term, 30 Day Period Between Payments/One Month.

These loan calculation results come out as follows,

$5,000 Personal Loan Calculation Results

Total Amount to be payed: $6651.77

Total amount of interest $1651.77

Payments: $109.34

As you can see, the payments are quite low, but if this loan was to be guaranteed there would be a very high late payment penalty on it. The lender in this case charged a hefty administration fee to approve it. Fairly standard practise when it comes to high risk borrowers.

2. Guaranteed High Risk Loan at 17% APR over 10 Years for $10,000

For this example the lender really stuck it to the borrower at 17% interest on the so-called high risk personal financing term. In this case the payment period frequency was the same as the first example 30 days or monthly. The length of the loan is 10 years and luckily it s not a compound interest rate.

After our calculation it looks like this;

$10,000 Personal Loan Calculation Results

Total Amount to be payed: $18,569.99

Total amount of interest $8,569.99

Payments: $152.63

In this example we see that because the borrower has such a high interest rate at 17% they end up paying for the principal almost twice. This kind of personal loan is to be avoided of course due to this amount of interest. An APR this high can cripple your average high risk borrower if they have other loan responsibilities on a monthly basis.

3. Guaranteed High Risk Loan at 21% APR over 7 Years for $20,000

The borrowers in this example may have been better off not applying for the loan in the first place. Sometimes there is no choice though if it s emergency funding. In this case the borrower(s) likely needed a co-signer before they could get approved.

If you except the terms of this financing and you have a co-signer you will be guaranteed to get approval. You can be sure that any bank that charges these kinds of rates will be shady at best. Unfortunately some borrowers just HAVE to the get the loan approved and approved quickly. (within a week of applying)

$20,000 Personal Loan Calculation Results

Total Amount to be payed: $62,040.28

Total amount of interest $42,040.28

In the results of this loan calculation you can see how bad it is. With an interest rate of 21% (APR) this borrower ends up paying $42.040.28 interest against the $20,000 principal outstanding amount. This is why this kind of an interest rate is illegal in some states.

In some countries that have fairly strict lending laws, this kind of high risk interest rate is criminal.

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