5 Warning Signs of Predatory Lending

Updated: Jun 5, 2019


Predatory lending occurs when a lender uses unfair or deceptive tactics to lead a borrower into taking a loan that carries fees, rates or other terms that benefit the lender at the expense of the borrower. Some predatory lenders may target subprime borrowers — those with credit scores below 630 and low income — but anyone can fall victim to predatory lending.


Here are 5 common warning signs:


1. Is the offer too good to be true?

Be skeptical when a company makes an offer that seems too good to be true. You may see ads from companies promising to mend your damaged credit, settle your debts for less than you owe or give you a cheap loan despite blemishes in your credit history.


Look for the catch before signing any agreement — the price for speed and convenience may be high fees, getting trapped in a cycle of debt or being forced to give up your assets.


2. What does the product truly cost?