Scams related to consolidation loans are on the rise in the US. Many illegitimate lenders are now trapping consumers who have a low credit score and are under high debt too. Consumers with low credit scores are easy to convince for a loan because they are already under high debts, and it is difficult to get a low-interest rate loan for them.
Some lenders are offering such low credit scorers luring options such as low-interest rate loans, no credit score evaluation, and quick funding.
According to Colony Associates Review, consumers are increasing their debts more after getting a loan through poor lenders. Such lenders are contacting the consumers through direct mails, internet ads, and cold calls.
They are convincing the consumers to provide a loan even at low credit scores but the consumers are getting unexpected higher rates on the monthly installments. And these installments are making their credit score worse and are leading them towards bankruptcy.
The debt consolidation loans are not bad if they have been taken from legitimate lenders. This type of loan is the best way to pay all the debts such as education fees, medical bills, and others through a single creditor at reasonable interest rates. But some lenders are benefiting from the consumers’ bad financial conditions and forcing them to pay high amounts in return on loans.
