Predatory Lending

When agencies are lending you make sure that you are still calling the shots. There are agencies that take advantage of people who are in need. Thus, there are actually a few techniques used by unscrupulous agencies (or simply the personnel) that still classifies as predatory lending.

Predatory sounds very ‘animalistic’ but really, such term is appropriate for those that have a no heart. This is when fraudulent, unfair and deceptive practices are used to force the borrowers to sign up with a loan. As mentioned, there are different techniques for predatory lending.

One form of predatory technique is when agency present the terms as non- negotiable. Loan terms are actually negotiable, so if agencies present them as wholly non- negotiable, there must be some type of ‘predation’ that is going on. There are some parts of loans that are negotiable but there are some that are really not. Usual negotiable terms are the payment period as well as the amount of your loan.

Another predatory technique is when agencies charge very high risk based price. Risk based pricing is for unsecured loans. Since the agency would not have any guarantee on unsecured loans, then they charge higher interest rates. In the same manner, when the interest rate is considerably higher than the market rate (with the same loan terms), the agency must be practicing predatory lending. Some also have hidden charges that surprise the borrowers, sometimes because of the very large amount.

Short-term loans are meant to have slightly lower interest rate, and any rate exceptionally higher than that of market rate is considered predatory.

Agencies have the responsibility of making sure that all terms and conditions in the contract are known by the borrowers. This includes any type of fees as well as any pertinent information. These documents are very tedious, thus, it could take days to read. That is why agencies should also explain ad highlight some important issues. Thus, some ‘predators’ actually go up to the extent of altering signed documents; thus, the borrowers are surprised of the changes.

Changes of servicing agencies or just about any changes that concerns the borrowers should be made known in advance. Though the borrowers usually do not have any choice on such (business) move, they should still be informed. Thus, any violation can be a ground for cases of predatory lending.

There are some states with laws against predatory lending, so you should check whether you are in one of those states.

Avoiding Loan Fraud

Avoiding loan fraud would be best accomplished by avoiding getting a loan. Don’t’ you wish it was that easy? We both know that taking out loans is not always part of your financial plans, but are often necessary. Sometimes the unappealing becomes the unavoidable. Every day misinformed consumers become victim to loan fraud and predatory lending. Most of these victims are seniors or first-time loan purchasers. If a loan becomes part of your plan, know how to protect your personal finances by avoiding loan fraud.

Shop around and investigate the lenders you are considering doing business with. They will be getting your money, so you need to make sure they’re reputable and will treat you right. If you hear anything that sounds like, “I can only offer you this rate right now…in five minutes….” or “We are your only shot at getting a loan like this”, its time to run in the opposite direction as fast as possible.

Don’t sign anything unless you’ve examined it carefully. Anything you put your signature to should contain exactly what you and the lender have discussed verbally. If there’s something you don’t understand, ask. The fees and interest rates should match what you’ve agreed to. If any of this information is off, you could be getting scammed. And if a lender tries to get you to lie about things on your application to get you more money, this is not a company you want to do business with.

If possible, try not to disclose that you need the money for anything urgent. If you sound desperate for the funds, a lender could try to take advantage. It will make you appear vulnerable and they may offer you something higher than what you’d normally get. Also don’t let the lender convince that you should get more money than you need. It may be tempting but you’ll pay the price in the long run. Finally, if it sounds suspicious or too good to be true it usually is. If things just don’t feel right, it’s better to walk away and be on the safe side. Avoiding loan fraud can be as simple as following your natural instincts