Disadvantages of High Risk Personal Loans

High risk personal loans are given to individuals with poor credit who would otherwise not qualify for any type of loan. They are typically extended as either emergency funds to cover an unexpected expense or as funds to pay off an existing debt load. If you have bad credit and need funds immediately for something like medical bills, car repair or even a wedding, you may seek a high risk personal loan. Similarly, if you need to pay off your lenders and consolidate into one monthly payment, a high risk personal loan can give you that option. Be careful, though, as there are many disadvantages including:

  • High interest rates
  • High fees for late payments, paying debt off early, refinancing, etc.
  • Detrimental financial consequences to defaulting

High risk personal loans are risky to both the lenders and the receivers. Before seeking a loan, work to understand the factors that lead to your poor credit. If you cannot get your expenses under control, you will find yourself in the same situation repeatedly. You are ready for this type of loan only if you have reason to believe you will make all payments on time.

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