In simple terms, predatory lending is a situation where a lender tries to exploit the borrower. It includes practices like setting the borrower up so that they fail or charging exorbitant rates. It refers to the use of trickery to deceive a borrower to take loans which have terms and conditions that put them at a disadvantage to the benefit of the lending company. TFC Title Loans takes you through some warning signs of predatory lending:
- If it sounds too good to be true …
- If you get an offer that is unbelievably attractive, you need to be skeptical. In the long run, you may end up paying higher fees and may be trapped in unending debt which will end up in the loss of your assets. Beware of companies that promise to repair your bad credit, give you some form of a very cheap loan, or even offer to pay off your debt for a lesser amount. Ensure that you understand the contract before you sign it.
- Confusing price points
- Another red flag you should look out for to identify predatory lending is a situation where you cannot fully ascertain the true cost of the loan. Transparency is key for loan companies and every detail regarding the cost of the financial product should be clearly displayed, as well as, any penalties, fees, or charges. If your lender cannot provide answers to all these questions, keep off.
- No credit checks or background checks
- If you find that the lender does not check your financial history before granting you a loan to see how well you can handle debt, then, expect that such a lender is predatory and will charge very high rates with a loan structure that carries exorbitant exhibit fees. This usually makes it difficult for you to repay the loan as at when due.
- Bad customer reviews
- Remember to check out the online reputation of your prospective lender before you sign an agreement. check out what other customers are saying about them and check the ratings. Also, verify to see that the lender's name does not turn up in the Scam Alerts of the FTC. Carry out all the necessary checks to ensure that there are no red flags whatsoever about the lender.
A good lending company should, at least, perform some sort of financial checks to determine your ability to repay your debts. Also, it will only provide you with an amount which fits your needs and will be transparent about the cost of the loan. Then again, whilst you can make your payments on time, a good lender reports this to the primary credit bureaus which will help to better your credit score. It will, also, help you to increase the length of your credit history while qualifying you to receive financial products that are less expensive in the future. TFC Title Loans is a credible lending company providing pink slip loans while helping clients come up with plans that are transparent for a payment. Read more at https://www.calculator.net/personal-loan-calculator.html
