What Is Predatory Lending?
Predatory Lending means the unethical and deceptive lending practices that can occur during the lending process for a home loan, home equity line of credit, or any other type of loan.
Unfortunately, senior are very vulnerable to predatory lending practices. These lenders prey on seniors by offering them loans with terms that are unfair and often impossible to meet.
Whenever a lender seeks to take advantage of a borrower and tie them into unfair or unmanageable loan terms, it can be considered predatory lending. Telling signs that you are a victim include aggressive solicitations, excessive borrowing costs, high prepayment penalties, big balloon payments, and being encouraged to consistently flip loans.
As a result, many seniors end up losing their homes, their life savings, and even their dignity.
How Do Older Adults Become Prey To Predatory Lenders?
Older adults become prey to these lenders for a variety of reasons.
- They may be facing a financial crisis and feel desperate for money.
- They may not understand the terms of the loan and agree to something that is not in their best interest.
- They may be cognitively impaired and not able to make sound decisions about their finances.
- They may be isolated and have no one to turn to for help.
As a result, they may make decisions that they would never make under normal circumstances.
What Can You Do To Help An Older Adult Who Is Being Targeted By Predatory Lenders?
If you are concerned that an older adult in your life is being targeted by one of these lenders, there are a few things you can do to help.
- Talk to the older adult about their finances and see if they are in a difficult situation. If they are, offer to help them find other resources to get the money they need.
- Help them understand the terms of any loan they are considering. Make sure they understand the interest rate, fees, and repayment terms.
- Contact the lender directly and tell them you are concerned about the loan and ask if there is anything they can do to help the older adult.
- You can contact your state’s Attorney General’s office or the Consumer Financial Protection Bureau to file a complaint.
Family members must be vigilant to make sure that older adults are not being taken advantage of by predatory lenders. By talking to the older adult and understanding their financial situation, you can help protect them from these scams.
What Should Older Adults Do To Protect Themselves From Predatory Lenders?
Older adults can take several steps to protect themselves from predatory lenders.
- They should talk to someone they trust about their financial situation. This could be a family member, friend, or financial advisor.
- They should carefully read and understand the terms of any loan they are considering. Make sure they understand the interest rate, fees, and repayment schedule.
- They should never sign a loan agreement without first reading and better yet, have someone else that you trust read it too.
- They should compare offers from multiple lenders to make sure they are getting the best deal.
- Older adults should contact their state’s Attorney General’s office or the Consumer Financial Protection Bureau to file a complaint if they believe they have been victimized by a predatory lender.
Older adults are often targeted by predatory lenders because they may have fixed incomes, own their homes, or have good credit.
If you have already taken out a loan from a predatory lender, there are still things you can do.
- Try to negotiate with the lender to lower your interest rate or monthly payments.
- You can file a complaint with your state attorney general’s office or the Federal Trade Commission.
Older adults should be aware of the dangers of predatory lending and take steps to protect themselves. If you have any questions about loans or other financial products, you should contact your state attorney general’s office or the Federal Trade Commission.
What Are The Consequences Of Taking Out A Loan With Predatory Terms?
Taking out a loan with predatory terms can have many consequences.
First, you may end up paying much more in interest and fees than you would with a traditional loan. This can make it difficult to repay the loan, and you may end up defaulting on the loan.
Defaulting on a loan can damage your credit score, making it difficult to get future loans. Additionally, you may be sued by the lender if you default on the loan.
If you are unable to repay a predatory loan, you may end up losing your home or other property through foreclosure or repossession.
Predatory lenders may also use collection agencies to try to collect payment from you, which can be very stressful.
Finally, taking out a loan with predatory terms can also put you at risk of identity theft, as some lenders may require you to provide personal information in order to qualify for the loan.
If this information is not properly protected, it could be stolen by identity thieves.
Predatory lending is a serious problem, and it can have devastating consequences for those who take out these types of loans.
Is Predatory Lending A Crime?
Although there are a patchwork of laws, federal and state in the USA to protect consumers from predatory lending – it is considered a crime depending on where you live and the laws in your particular area.
I would recommend that you speak with an attorney about the particular laws in your state and what can be done if you find yourself in this situation.