What Is Predatory Lending?


Quick Answer

Predatory lending is the practice of targeting uninformed investors for a loan product. This term has been used extensively in the context of the 2008 financial crisis as well as the housing market collapse at the same time.

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What Is Predatory Lending?
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Full Answer

When a lender engages in predatory lending, it is targeting a consumer who does not understand loan terms. Several practices are considered predatory. These practices can include not properly disclosing the loan terms, adding extra charges into the loan or selling a loan product that keeps the consumer in debt. Predatory lending is illegal. The Equal Credit Opportunity Act is the greatest consumer protection in the United States.

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