Predatory Loans: What Are They and How Do I Avoid Them?

It’s no secret many people eventually encounter difficulties dealing with their finances. In some cases, it’s a matter of poor borrowing habits and improper money mismanagement. But other times, people fall victim to circumstances beyond their control and wind up needing money through no fault of their own.

When they can’t pay bills and creditors start calling, people begin to panic. With their backs against the wall and seemingly limited options, they can easily fall into the trap of seeking assistance from lenders, all too willing to help those in need.

Unfortunately, these are often lenders who attach restrictive strings to everything they offer. We refer to this as predatory lending.

What Is a Predatory Loan?

A predatory loan is a loan containing terms and conditions heavily favoring the lender. Frequently to the detriment of the borrower. The loans themselves can take the form of unsecured or secured loans.

Predatory lenders typically set out to take advantage of a potential borrower’s adverse situation. They’ll present their loan options under the guise of being able to rescue customers from financial difficulties.

Those with significant financial fears or concerns about bankruptcy or the debt…