In the past week, I have met with two different clients who have recently signed up for loans of $20K – $30K with interest rates around 30%. In both cases, the loans were registered as second mortgages without the client fully understanding that this was being done. There were also numerous fees and insurances attached to the loan that the clients were unaware of. At 30%, the client will pay $80K over 10 years to payoff a $20K loan.
The clients had a need for these loans but they were taken advantage of because of their desperate situation and lack of knowledge regarding loans/mortgages in general. In both situations, they could have easily taken out a 2nd mortgage at 8-12%, as opposed to the 30% that they signed up for.
The message here is to be aware and make sure you fully understand what you are signing up for. Do your research and explore your options. When in doubt, take a step back and get a second opinion before it’s too late.