redatory loans are has built up in their home. Most
becoming a big issue in the often elderly, low income and
financial world. Law makers minorities are the targets. These
are focusing on how to weed out predatory loans cause people to
predatory lenders and protect the be unable to pay and then leads
public from their scams. To avoid to foreclosures.
a predatory loan you need to know
what they are. You also need to The excessive fees charged are
be aware of the groups they more than 5% of the total loan.
normally target. Then you can be There are other methods of adding
more likely to avoid these loan excess costs to these types of
scams. Predatory loans can loans. The following lists these
devastate a persons finances and other fees and tactics used by
have a bad effect on the economy. predatory lenders to take your
money.
Predatory lending is when lenders Abusive prepayment penalties -
add unnecessary fees and excess This is a fee that is charged
expenses to a loan. These lenders when the loan is paid off early.
advertise to those who have bad
credit or might otherwise not Unnecessary products - These
qualify for a loan. They justify include insurance or other items
the extra fees because of the that are not necessary to get the
risk of lending to this category actual loan.
of people. They like to target
people who already own a home, Mandatory arbitration - This is a
but have no money otherwise. clause in the contract that takes
away the borrowers rights to
The process ends with the lender fight the lender in court.
taking all the equity the person
Steering and targeting - This is assets you have and not based on
where these types of lenders talk your ability to pay back the loan
people into predatory loans when - this is the biggest sign of a
they actually could qualify for a predatory loan. If you feel like
traditional loan. These practices they are not telling you
make predatory lenders stand out everything or you do not
from your average lender. This is understand something then it is
what makes them so dangerous. best to walk away.
Avoiding a predatory loan is a If you do end up being a victim
matter of knowing the facts about of a predatory lender you can
predatory lending. If you are in call a local consumer office or
their target group then be very contact the Federal Trade
aware of anyone approaching you Commission. You should also
to get a loan. If you feel contact the Better Business
pressured at all do not accept bureau. Seek help immediately
their offers. Shop around when from a legal professional. You
looking for a loan. Avoid loans may have more rights under the
with high fees. Check the lender law that you do not know about.
out with the Better Business Some state and federal
Bureau. Make sure you completely regulations may be able to help
understand the terms of the loan. you.
Predatory lenders are part of the
Read everything before signing new group who are trying to cash
anything. Watch out for balloon in on people's bad credit. With
payments, these are large so many people having credit
payments at the end of a loan. related issues, these lender are
You should avoid loans that are finding it easy to talk people
based only on the amount of into fast and easy money. Once
you know what to look for in a that come along with them.
predatory lender you can avoid
the hassle and money troubles
About the Author:
Alan Jason Smith is the owner of http://www.lplending.com which is a great place to find lending links, resources and articles. For more information go to: http://www.lplending.com
Source: www.isnare.com
