Predatory Lending Red Flags
As every wannabe social media influencer knows, people go out of their way to give you free stuff when you are already rich. For the rest of us, there is a mailbox full of loan offers. Not every loan shark is a sharply dressed motormouth like you see in the movies. Some of them hide behind very official looking correspondence; sometimes their return addresses even bear the names of banks that you see on your daily commute to work. While borrowing money can spare you from financial ruin in your time of need and can even improve your financial situation in the long term, lenders never have entirely altruistic motives. Almost every kind of financial product, from home mortgages to credit cards to home equity loans, benefits the lender more than it does the borrower. You should ask a lot of questions, read the fine print, and explore your options before borrowing money; of course, when you are in dire need of a quick influx of cash, it is not easy to do that. Therefore, predatory lending tends to target the people with the greatest financial need. If predatory loans have ruined your finances, contact a Jupiter debt lawyer.
How Can You Tell If a Loan Is Predatory?
The better your credit, the lower the interest rates you can get and the more you can borrow, but there is more to predatory lending than just high interest rates. When you ask the bank for an unsecured personal loan and the interest rate is high enough to make you catch your breath, the chances are good that the rate is really the lowest the bank can offer you given your credit score. Predatory lending is more than that, though. It is when lenders exploit your vulnerable financial situation to make access to loans even more expensive than your credit score alone dictates. Predatory lending is any lending situation where lenders use deceptive marketing techniques to persuade consumers to borrow, or where the terms of the loan are unfair or abusive. Payday loans are the most famous kind of predatory lending, but subprime mortgages are also by nature predatory. Loans where the chances are good that the borrower will have to give up some of their equity in an asset also tend to be predatory; these include auto title loans and home improvement loans for retirees.
Excessive fees are a major indicator of a predatory loan; no one should charge you more than five percent of the principal amount in fees. Costly penalties for early payoff are also an abusive tactic. Likewise, it is also a red flag if the lender forces you into a choice where you have to keep refinancing the loan in order to avoid a default.
Recovering From Predatory Lending
Predatory loans are a major source of bankruptcy and other types of financial hardship, but a debt lawyer can help you rebuild your finances after being a target of predatory lending. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.