In today’s day and age, it is important to know and understand the various types of loans and financing arrangements available in the market. Predators in the lending world attempt to take advantage of vulnerable borrowers, which can have long-lasting and potentially devastating consequences. Understanding what predatory lending entails is key in protecting yourself from unscrupulous lenders.
What Is Predatory Lending?
Predatory lending is when lenders take advantage of unsuspecting or financially vulnerable borrowers. The lenders target these borrowers by offering loans or financing arrangements that are overly costly and carry high levels of risk. Predatory lenders commonly charge exorbitant interest rates, upcharge unnecessary fees, and often have long-term consequences for the debtor or borrower.
Deceptive Practices Commonly Employed by Predatory Lenders
Some of the deceptive tactics predatory lenders commonly employ include charging hidden fees, hiding terms and conditions from borrowers, and misleading borrowers with false promises of low-interest rates. These lenders may also attempt to coerce a borrower into signing a contract they wouldn’t have otherwise agreed to if given the correct information. In some instances, lenders will also target borrowers with poor credit scores, who are more desperate and more likely to take the bait.
How to Protect Yourself From Predatory Lenders
One of the best ways to protect yourself from predatory lending is to be aware of any unsolicited offers and to be wary of any lenders offering excessively lenient terms and conditions. Additionally, borrowers should always read the fine print in any agreements they are presented with, as well as find out what terms and cost a lender is offering. It is also important to familiarize oneself with the correct rules and regulations that govern predatory lending in their area.
Conclusion
Predatory lenders are operators who employ a number of suspect techniques and tactics to take advantage of unsuspecting borrowers–and they commonly target financially vulnerable and desperate borrowers in particular. It is important to be aware of and understand the legal aspects of predatory lending, along with the different deceptive practices that are commonly employed by these lenders. This knowledge can go a long way in helping to protect yourself from predatory lenders and ultimately save you money and time.