Anatomy of a Predatory Loan
In certain contexts, telling people not to engage with predatory lenders sounds less like helpful advice and more like blaming the victim. No one would choose to take out a loan with an interest rate in excess of 100 percent unless they reasonably believed that they had no other choice. People use payday loans, auto title loans, and other very expensive financial products because affordable loans like the ones that wealthier people use are unavailable to them. Assuming that borrowing from a bank or a credit union is not an option, how do you choose the least bad option of the loans available to you? What should you look for in the fine print of personal loans advertised on peer-to-peer lending sites? If you did not notice these predatory lending red flags until it was too late, the best thing you can do now is to contact a Jupiter debt lawyer.
The best loans don’t have to shout to be heard; borrowers come to them, usually after carefully researching the loan terms. Predatory loans, by contrast, take every opportunity to invade your mailbox and your email inbox and to slide up in your social media feeds. They lead with big promises of how much you can borrow and how quickly this princely sum can arrive in your bank account.
Pushy Sales Tactics
Once you contact a lender about a predatory loan, they tend to pressure you into signing the loan agreement and give you very little chance to ask questions. A ProPublica report about an auto title lender in Georgia even revealed that the company’s policy was to show customers the loan terms on a screen instead of printing them out. As with prenups, you should not sign unless the other party (in this case the lender), gives you a chance to review the terms on your own and think carefully about whether you want to sign.
Immoderate Repayment Terms
Conventional loans tend to have a repayment term of anywhere from six months to five years; home mortgages have a longer repayment term, 10 to 30 years, because of the large amount of money borrowed. By contrast, predatory loans tend to have very short or very long repayment terms. For example, payday loans tend to require repayment within a matter of weeks, while auto title loans have such long repayment terms that you can make payments on them for decades and barely make a dent in the principal.
Prepayment Penalties and Other Junk Fees
With most loans, you can save a lot of money by paying them off early; if they charge prepayment fees, the amounts are low. With predatory loans, however, the lender wins and you lose even if you pay off the loan early, because the prepayment fees are so high.
Work With a Debt Lawyer About Avoiding Predatory Loans
A South Florida debt lawyer can help you get out of debt if you are in debt to predatory lenders. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.