Predatory lending is when you are charged excessive fees for loans or payment agreements. Often times, these lenders fail to disclose all terms and costs up front. Nobody wants to fall in this trap. So, how can you detect when a lender is a predator?
- Beware of someone that contacts you out of the blue! These people run credit checks on you and see that you have debt. Then, they call you to tell you the benefits of refinancing with them. If you tell them “no” right away, they will keep calling. These, my friends, are predatory lenders.
- Look for all the fees. Most people don’t look at the tiny, tiny print on documents they need to sign. Take a good look at all the documents and see if there are any hidden fees. If there are, then the loan is probably a predator loan in disguise.
- Look at the interest rate. What makes a predatory lender the most money is the high interest rates they charge. An easy way for you to find out if the interest rate is too high is by researching the prime interest rate at bankrate.com. Any rate offered at prime plus 8% might be considered an excessive rate.
- Research the company. Nowadays, you can find reviews for pretty much anything online. Research the company on the Internet and/or check with your local Better Business Bureau. By doing this, you will quickly determine If there is something “iffy” about the company.
If you have experienced any of the above, STOP! You might be dealing with a predatory lender.