Some predatory lenders are those offering subprime mortgages, payday loans, car title loans and overdraft protection, claims the Assets for Independence Resource Center. Predatory lending is a practice that manipulates the borrower into complying with an unfair or dishonest loan. It occurs by a financial institution taking advantage of a person's financial struggle and charging him higher-than-normal interest and fees, states the National Association of Consumer Advocates.Continue Reading
Subprime mortgages are loans on homes for people with low income or negative credit history. When a subprime mortgage involves directing and manipulating or taking out an unaffordable loan, excessive fees, loan flipping and intimidation to persuade the borrower to purchase unneeded products, it is called predatory, according to the Assets for Independence Resource Center. Payday loans help someone in need of money receive a short-term loan. The receiver of the loan ends up paying up to a 400 percent yearly interest rate.
When a person takes out a loan by giving the lender his car title, it is known as a car title loan. Usually, the borrower receives 25 to 50 percent of the car's total value. If the borrower defaults on the loan, the lender then owns the person's car at a price way lower than its value. With overdraft protection, any charge that causes an overdraft incurs a fee, usually without the person who chose the overdraft protection knowing, claims the Assets for Independence Resource Center.Learn more about Credit & Lending