(MoneyHippo.com) – Predatory loans are high-cost loans that are designed to trap borrowers in a cycle of debt. These loans often come with hidden fees, high interest rates, and other predatory terms that make it difficult for borrowers to repay the loan. Here are some signs that a loan may be predatory:
- High interest rates: Predatory loans often come with exorbitant interest rates that can make it difficult for borrowers to repay the loan. Be wary of loans with interest rates that are significantly higher than average.
- Hidden fees: Predatory loans may come with hidden fees or charges that are not clearly disclosed upfront. Be sure to read the loan agreement carefully and ask questions about any fees or charges that you don’t understand.
- Pressure to sign quickly: Predatory lenders may pressure borrowers to sign quickly, without giving them time to review the loan agreement or compare it to other loan options.
- No credit check: Predatory lenders may offer loans with no credit check, which can be a red flag. Lenders typically need to check a borrower’s credit history to assess their ability to repay the loan.
- Unsecured loans: Predatory lenders may offer unsecured loans, which means that there is no collateral to back up the loan. This can make the loan more risky for the lender, and may lead to higher interest rates and fees for the borrower.
- Negative reviews: Before taking out a loan, do your research and check the lender’s reviews online. If the lender has many negative reviews, it may be a sign that they engage in predatory lending practices.
Overall, be sure to carefully review the terms of any loan before signing, and don’t be afraid to ask questions or seek out other loan options if you have concerns about the loan terms or lender.
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