Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. In many cases, these loans carry high fees and interest rates, strip the borrower of equity, or place a creditworthy borrower in a lower credit-rated (and more expensive) loan, all to the benefit of the lender. Predatory lenders often use aggressive sales tactics and take advantage of borrowers’ lack of understanding of financial transactions. Through deceptive or fraudulent actions and a lack of transparency, they entice, induce, and assist a borrower to take out a loan that they cannot afford and will not reasonably be able to pay back.
KEY TAKEAWAYS – Predatory lending is any lending practice that imposes unfair and abusive loan terms on borrowers, including high interest rates, high fees, and terms that strip the borrower of equity. – They typically target vulnerable populations, such as those struggling to meet monthly expenses; people who have recently lost their jobs; and those who are denied access to a wider range of credit options for illegal reasons, such as discrimination based on a lack of education or older age. Common Types of Predatory Loans Subprime mortgages Classic predatory lending centers around home mortgages. Because home loans are backed by a borrower’s real property, a predatory lender can profit not only from loan terms stacked in their favor, but also from the sale of a foreclosed home, if a borrower defaults. Subprime loans aren’t automatically predatory. Their higher interest rates, banks would argue, reflect the greater cost of riskier lending to consumers with flawed credit. But even without deceptive practices, a subprime loan is riskier for borrowers because of the great financial burden it represents. And with the explosive growth of subprime loans came the potential for predatory lending. African American and Latinx homeowners were particularly affected. Predatory mortgage lenders had targeted them aggressively in predominantly minority neighborhoods, regardless of their income or creditworthiness. Data shows that African Americans and Latinos were more likely to receive subprime loans at higher costs..
What is considered a predatory auto loan? A subprime loan can become predatory if it’s offered to someone whose credit qualifies them for a better loan. Subprime loans may also be predatory if the rates, penalties, and fees exceed what’s reasonable for the borrower’s financial situation. Be cautious with some of these buy here pay here car dealership lots that are popping up in your neighborhoods making car ownership deals sound like a dream come true. Beware, do your research, because it may be a financial nightmare in disguise. They offer easy access to become a car owner, but with high risks loans and riskier high interest rates. Moreover, unrealistic penalties if you are late with a payment or fall behind, which they are preying on the realistic possibility you do; here is where the entrapment comes in. The repossession process is where they really take full advantage of the borrower by using a tracking mechanism on the car to locate the vehicle, tow it 50-75 miles away from their home, making it difficult for them to get to the vehicle. The lender and the tow company make a considerable amount of their money on the back end, charging astronomical fees to retrieve the vehicle, including but not limited to late payment(s), late fees, towing fees, vehicle daily holding fees and whatever hidden fees they can attach. If the borrower cannot afford to pay, they keep the vehicle, the borrower loses all the money they paid into the car (making it an expensive rental car) and the transaction appears on your credit report as a repossession, thus dropping your credit score even lower. It’s done every day, preying on the less fortunate.
We here at Minding My Business have found this to be unacceptable practice in these communities and to our neighbors. Our plan is to educate our neighbors with the tools needed to position them to qualify for purchases and/or to qualify for bank loans with the lowest interest rates. Predatory lenders will be eradicated from our neighborhoods and will no longer be able to prey on our communities. Hope you enjoyed today’s video, Please show your love and support by just liking and subscribing to the channel so we can grow a strong and powerful community. Activate the 
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