We know there are MANY reasons why at some point we need to borrow ten grand and even as much as $100,000 or more. You can go the hard money route, but I would gander a guess that you are like me and you want to get a loan with a lender who is not trying to fleece you in the process – I know it’s easy to get frustrated with all the crap out there on the Internet these days, but there actually are some lenders left in this world that have some scruples left. However, we can discuss those companies a little later.
For no collateral personal loans over $50,000, $60,000, $70,000, $80,000, $90,000, and up to a whopping $100,000 dollars, you are going to be borrowing at an APR that may break your back before long. Almost every loan, that every bank approves will involve collateral of some kind, whether it be a savings account, a vehicle, a house, or a rental property – the banks have to have security or they will not even consider dispersing the funds you. So if you are willing to take on a no collateral loan there are some details you need to understand regarding this kind of personal financing.
We are going to pull out our loan calculator again today and show you the different no collateral lending scenarios you are likely to see approved at the consumer (personal) level. Get ready to see some big numbers, because we are talking about borrowing up to one hundred thousand dollars at a high APR (as already mentioned above, but you need to get these hard money lending practices understood thoroughly before you even think about applying with a private or commercial lender. Now, before we get calculating your no security loan we need to cover one more thing.
See the flashy “APPLY NOW!”? This is where you (the borrower) are supposed to get excited and start throwing caution to the wind. Even worse, throwing out your hard earned money on a really high “vig”. Please avoid applying for your persona loan(s) online “willy-nilly” as the English would say. Every loan application you make, whether is online or offline will be noted in a database by the usual suspects (the credit bureaus). Stop foaming at the mouth, dreaming about how you are going to spend all that money once you get approved – you need to do your homework first, and get real. I know this sounds quite harsh, but more borrowers to hear the hard cold facts before they start applying for loans all over the Internet and all over town. Just because a lender is an Internet lender does not mean the record of you applying for the loan does not show up on the Experian, Transunion, and Equifax databases. So without further delay, let’s get into the numbers on some no collateral (no security) loans.
No Collateral Loan for $50,000 Dollars
To borrow 50000 dollars with no collateral you will be looking at an APR of around 16% because the lender will ultimately be a private lender. Banks won’ t approve a loan with absolutely no security because this kind of lending product is not even considered and Non-Conforming loan. Don’t even waste your time applying at a bank, maybe the most prudent way to go. This also means that you have to beware of loan sharks, and find a legitimate and reputable private lender. We’ll get into that a little later, but now we start with a calculation of APR (interest) over the term of a private deal.
We’ll (once again) use our calculator at the bottom of the page to tally up what you will likely be expected to pay in interest over the full life of the private note. Get ready for some big interest numbers here as we need to see the highest costs of these types of lending agreements. By the way, there is some debate on whether or not these exceedingly high interest rates should even been lawful under United States statutes.
Amount of loan = $50,000 (no collateral)
APR (interest rate) = 16%
Length of Loan = 5 years
Payment Frequency = monthly
$50,000 No Collateral Loan (Calculation Results)
Total Amount to be payed: $70,329.52
Total amount of interest $20,329.52
Now let us examine the results of this kind of lending scenario. See how the very high APR equates to a massive total interest cost of over twenty thousand dollars? See how this loan was for only 5 years? Really – unless you are really desperate for money AND you are SURE you can pay back the note long before the 5 year period, I would suggest against it.
No Collateral Loan for $100,000 Dollars
So now we step things up to the highest interest rate legal. 25% APR is the standard legal limit for interest bearing loans.
For a no collateral loan with absolutely no security, and a bad credit rating to boot, you could be facing this kind of enormous cost of borrowing.
For this non-security loan for 100k the numbers below represent the lender’s demands on the cost of borrowing. $100,000 dollars over 10 years at 25% using biweekly payment frequency (period between payments)
Amount of loan = $100,000 (no collateral)
APR (interest rate) = 25%
Length of Loan = 10 years
Payment Frequency = biweekly
$100,000 No Collateral Loan (Calculation Results)
Total Amount to be payed: $225,479.83
Total amount of interest $125,479.83
Pay special attention to the total amount of interest on this loan. See how you are actually paying more interest over the 10 year period that the actual principal of the loan – 125,000 interest on a loan for 100,000.
Obviously you never want to borrow this amount of money at these rates for an extended period of time. You have to be in a position to pay back the lender in full quickly. This is why for these high interest rate loans you must make sure the lending agreement between yourself and the lender states clearly that there is NO PENALTY for paying down the principal in lump sum payments, and no penalty for completely paying off the loan early. Otherwise, this is a very bad way of borrowing money. Believe it or not, we have seen individuals get personal loans from private lenders at these high interest rates.
As long as they have allot of money coming in every month, and they can fully service the note, they actually end up paying off the entire loan without default – but what a huge loss in expensive borrowing. Please avoid this kind of borrowing at all costs. If you are borrowing the money short-term for the use in a business or land development deal, stay away. A loan as expensive as this one should be paid off in no less than 3 months time.
No Collateral Personal Loan for $10,000 Dollars
Now, if you need a $10,000 loan we will use a cost of borrowing rate much more in line with a common personal loan. The interest in this case will still be typical of a loan approved for a borrower with a moderately damaged credit rating (FICO of 650). You will see that this loan can be paid down over the entire term of loan without having to pay a stupid amount of interest to the lender. Your average reputable bank will use these numbers, so you are not tied to a private lender, or hard money lender.
As mentioned and worth re-stating, a borrower (maybe you) can usually get an unsecured personal loan for ten thousand dollars without any kind of collateral, AND a poor credit rating – the rub is that you need to have a full time job for a few years, and show that you have been living in the same place for the same amount of time. The bank’s only security, in lieu of collateral, is your monthly (or biweekly) employment income, so if you don’t have some documentation from your employer showing your good standing within the organization, and perhaps a personal reference of your work record and character. When there is no collateral at all, you can expect the lender(s) to get really uptight about loan default issues. They will see you as a high risk borrower, and the interest rates will tendered based on this information.
Below our numbers go as follows; 10,000 dollar loan over 3 years, paid monthly with an APR of 12 %.
Amount of loan = $10,000 (no collateral)
APR (interest rate) = 12%
Length of Loan = 3 years
Payment Frequency = monthly
$10,000 No Collateral Personal Loan (Calculation Results)
Total Amount to be payed: $11,849.65
Total amount of interest $1,849.65
Notice how this personal loan is much more reasonable and therefore appropriate in the opinion all our CLF staff. The amount of interest paid during the course of the loan is manageable, and the payment every month are not so much that they would leave you in a “debt poor” situation. Of course you will have to watch your monthly and weekly budget constraints (if you have been smart enough to make a full monthly budget report for yourself and/or family.
In Closing on Needing a No Collateral Personal Loan
As you can see by the numbers above, a no collateral loan can “break you” or “make you”. You have to be careful how much you borrow and what the loan agreement has in the fine print. I hope we have made it clear that no matter how bad your credit rating is, you don’t want to borrow so much money, without collateral, that you are labeled a high-risk borrow and as a result, end up paying more interest on the loan than the principal. This is what we at California Loan Find call having an “underwater by APR” loan.
I know it can be very tempting to apply for a no collateral, no security, high risk personal loan, because you really are desperate for the money, but the long term affect of these lending products can be crippling to say the least. You have to make sure you do your numbers.
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