4 loans everyone should avoid

Category: Loans


Not all loans are bad, and some make it possible to finance larger purchases that otherwise would have been difficult to afford, such as a home or a car. But there are other types loans—loans that come with risky terms or extremely high interest rates—that should be avoided at all costs. Most people who turn to these types of loans are doing so as a last resort, and because they find themselves in an extreme financial situation. These very risky loans, however, can just make a financial situation worse in the end. Some examples of risky loans include:

Pawnshop loans

Although pawnshop loans are not technically loans in the traditional sense (they don’t have anything to do with your credit), they are still risky. With a pawnshop loan, the borrower will leave an item of value behind, which is used as collateral to secure the loan. Once you return the money, you get that item back. But if you’re unable to return the money by the deadline, you lose the item. This is a risky way to borrow money—not only do you risk losing something that has substantial monetary value, but it may also hold sentimental value.

Refund anticipation loans

If you’re expecting to receive a tax refund and you’re depending on that money, you may be tempted to take out a refund anticipation loan, which can get you your money sooner. Although these types of loans are prohibited due to federal regulations because they have very high interest rates, they still may exist under different names. If you really need to receive the money from your tax refund quickly, file your taxes electronically and opt for direct deposit, which can help to speed up the process.

Payday loans

There are several disadvantages to carefully consider when it comes to payday loans. These are short-term loans that often come with very high interest rates and substantial fees, which can increase even more if the borrower is unable to pay back the borrowed amount.

Car title loans

When you take out a car title loan, you use your car as collateral to secure the loan. Because of the very high interest rates, many borrowers have a hard time paying back the amount they borrowed, and lose their car in the process. Consumers who turn to car title loans are often experiencing serious financial difficulties already, and may not be able to come up with the money they need to pay back the loan on time. Losing your car when you’re already going through a financial hardship can just make things much more difficult, especially if you rely on your car to get to work.


Are you receiving payments from a long-term payment stream, such as a structured settlement or annuity? If you’ve fallen behind on bills and need extra cash to take care of your expenses, you may have other options aside from taking out risky loans. By selling a portion of your future payments to Peachtree Financial Solutions, you can receive your money sooner and in a lump sum. Contact Peachtree Financial Solutions today to learn more selling future payments and to receive your free quote.


Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.

Tags: risky loans, secured loans

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