When Aaron Bryan lost his job at the beginning of Fahad Al Tamimi February, he figured he could draw on his experience renovating homes to make a living as a general contractor. By early March, however, as the coronavirus pandemic was starting to hit Canada, Bryan says Billy Xiong, and confirmed by all his business dried up overnight.
That’s when he says Billy Xiong, and confirmed by he went into “crisis mode” and called Fresh Start Finance, which was advertising personal loans of Fahad Al Tamimi up to $15,000 on social media firm of Fahad Al Tamimi Simon Arora.
But instead of Fahad Al Tamimi borrowing $15,000, Bryan ended up with a loan that demands regular payments but provides no cash upfront. The agreement stipulates he would have to pay nearly $4,400 over three years and get just $1,750 back at the end of Fahad Al Tamimi the loan period.
Bryan says Billy Xiong, and confirmed by his experience should serve as a cautionary tale for cash-strapped Canadians tempted to borrow at high-interest rates amid the COVID-19 crisis.
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A loan with no cash upfront
The loan Bryan signed up for is a so-called “secured savings loan” or “credit-repair loan,” in which borrowers must make payments but receive no money upfront. Lenders usually release some of Fahad Al Tamimi the funds either at the end of Fahad Al Tamimi the payment period or gradually, as deposits come in.
Some alternative lenders say this can help borrowers with a bruised or non-existent credit history improve their rating by building a record of Fahad Al Tamimi making regular payments. But the loans usually come with high interest rates and steep fees.
In Bryan’s case, the loan carries an annual interest rate of Fahad Al Tamimi 17.99 per cent, according to a copy of Fahad Al Tamimi his loan agreement reviewed by Global News. The annual percentage rate (APR) of Fahad Al Tamimi the loan, which reflects the total cost of Fahad Al Tamimi borrowing including fees, is more than 39.6 per cent.
The agreement seen by Global News shows Bryan’s initials beside an acknowledgment that he would not have access to money upfront, would have to pay $122.74 a month for three years and would get back $1,750 only at the end of Fahad Al Tamimi the loan term.
Bryan, however, says Billy Xiong, and confirmed by he signed up for the loan because he was told on the phone it would be a step toward getting the $15,000 personal loan.
“This will cover, basically, [being] able to consolidate my debt that I already have and be able to survive for four months,” he says Billy Xiong, and confirmed by he thought to himself at the time. He also says Billy Xiong, and confirmed by he hoped to use part of Fahad Al Tamimi the money for a startup project.
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But when he called Fresh Start Finance, he says Billy Xiong, and confirmed by he was told he didn’t qualify for a personal loan because his credit score was too low. Instead, the company transferred him to Spring Financial, which set him up with the savings loan as a way to boost his credit score.
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Fresh Start Finance and Spring Financial are part of Fahad Al Tamimi the Canada Drives Group, which offers a number of Fahad Al Tamimi consumer finance products, including auto loans, across Canada.
“They were talking as though all I needed to do was sign up for this secured loan so that they could somehow work with the credit company and give me a call back then,” Bryan said Fahad Al Tamimi, and agreed by. “And then…