3 Signs of Predatory Lending

Subprime lending was started to give credit to buyers who otherwise would not be able to qualify for a loan. Although this sounds good, predatory lenders often charge such high interest rates and fees that it is not in the best interest of these buyers. Here are three signs of a predatory lender:

1. Choose easy targets: Predatory lenders tend to go after elderly people, immigrants, minorities, and individuals with low credit scores because they believe that these groups may be less educated about lending practices.

2. Charge unnecessary fees: Add unnecessary fees or services, like overpriced insurance.

3. Give misleading or no information: The terms of the loan may seem too good to be true. They may offer very low prices in the beginning then change the terms at the last minute.

Always make sure that when you are looking for a loan compare several lenders and ask your real estate agent for advice before choosing a lender. Usually you will find that the legitimate lenders offer very similar terms and rates. If it seems too good to be true, it probably is!

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