Predatory lending occurs when borrowers of a loan are led into a transaction that is different than what they expected. Predatory lending inflicts unfair loan terms on potential borrowers. Predatory lending benefits the lender, not the borrower, and ignores the borrower’s ability to repay the debt and affects the less educated.
This includes minorities, the elderly and the poor and it is a tactic that takes advantage of their lack of understanding about loans, terms or finances. For instance, people who need to pay medical bills, make a home repair or who are in dire need of making a car payment are all targets of predatory lending/lenders. Lenders will also target borrowers with credit problems or the recently unemployed. Credit issues will often disqualify borrowers from access to loans.
Many people have different opinions about what qualifies as predatory lending so in order to educate yourself more on what predatory lending can consists of here are a few examples: non-disclosure of the true cost of a loan, hidden fees, switching an original loan agreement to one that is much higher, encouraging borrowers to take more of a loan than they actually need and using abstract language in contracts that prevent a borrower from taking any future legal action.
In order to protect yourself against predatory lending, some of the things you should watch out for include: loan offers via mail or telephone, promises that your loan will be approved regardless of your credit history, unreasonable high interest rates and being rushed to sign any documents regarding your loan.
Federal laws protect you from excessive interest rates and fees. If you feel like you are a victim of predatory lending or want to go over the contents of a contract, contact our attorneys at the Goldbach Law Group.