Predatory lending is a grave issue that affects many persons who unknowingly fall victim to the lender. The one lending the money seeks to make it impossible for the borrower to repay the loan as they should increasing the debt on that individual. They try to profit significantly once the individual is unaware of their rights and take full advantage.
If you are looking to borrow money for whatever reason, this is for you, so please pay attention. You must understand about acquiring personal loans, especially from anyone looking to take advantage of you. This information will help you in choosing individual loan lenders that aren’t predatory.
Ways To Avoid Them
Don’t borrow if you know the person but don’t consider them someone close enough to trust. It is best to borrow from a certified lender who is obliged to follow the state’s laws regarding lending money. If you go the certification route, you are guaranteed a safe and reliable way to repay your loan without getting robbed. This option is a crucial step to becoming debt-free if followed.
Predatory Warning Signs To Know
If the person you are borrowing money from asks for your bank account information, that is a bad idea. If the offer you are getting is too good to be true, it probably is so. If you have no idea what your final payback amount is from the lender, you should also be concerned. You should check out the lender’s reputation for any discrepancies. Another important red flag warning is rushing through the process more received more than you initially asked for in the contract. These are sure signs that something is wrong so consider what is shared.
Predatory Lending Traps
It may surprise you that some of the ways to fall victim to this type of loan fraud are very common. The loans that predatory loaners offer can be everyday and long-term, so you can’t separate them by the kind of loan alone. Here are some of the loans provided that can make you a victim:
- Equity Loss:
- Flipping A Loan:
- Unseen Balloon Payments:
- Penalized Early Repayments:
- Defective Fees:
Lender finds ways to make your property sell cheaper than its actual cost; foreclosures are one of the main targets for these persons.
You need cash, and all you have is your property. The lender tricks you into refinancing your home, which means you lose as your interest rate increases.
The lender often doesn’t notify you about payments, and you only know about the extra details when you have already agreed. This problem occurs a lot with mortgages and closing.
Most lenders benefit more when you take longer to pay. They don’t like this, so they punish you for clearing the loan too early.
There is a bait and switch system where you pay for goods and services that you don’t receive. What you get is something different.
These are some of the ways you can become trapped into severe debt by predatory lenders. They love to take advantage of those with lousy credit and put them in a deeper hole as they find it difficult to recover.
Lenders favorite Target Groups
The main targets for these individuals are persons with low incomes, whether a family or single. They also target the elderly, those in particular who may live alone. If you rent a home and work for between $15,000 to 425,000 annually, be aware. The age bracket considered most susceptible to them is 25 to 49 years, especially African Americans. When seeking loans take all of this into consideration as it could make or break you.
Legal and Illegal
This type of practice is illegal in fourteen states, while thirty-six states allow it. It would benefit anyone thinking about borrowing to learn which states allow it from those that do not. That way, you would know if you have any protection from the government against such criminal activity. Statistics claim that some payback fees can be over 400%, and that is a ridiculous amount. In my opinion, this is a terrible thing to go through.
Predatory lending is something I wouldn’t want to encounter. I hope that no one would have to deal with this, but many people daily deal with it. That is why taking this information to heart is so important. It may help you make wiser decisions or inform someone else about any they are about to make and save them much heartache.