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Learn the Warning Signs and Avoid Predatory Lenders
In a bad economy, some lenders seek to capitalize on the misfortune of others. Before you are misled by a predatory lender or victimized by loan fraud, learn the warning signs that could help you stay safe amidst economic turmoil.
Predatory lenders make unrealistic promises
No one can be making promises or talking about sure things in a difficult economy. If a potential lender is, you should be suspicious. This is especially true if the lender makes promises before they have had a chance to look at your current loans or financial situation. Some predatory lenders may make promises about future refinances or ways to rectify problems later on, which could appeal to young or misinformed home buyers.
Predatory lenders may ask you to pay an up-front fee
The Federal Trade Commission notes that you should be concerned about potential loan fraud when lenders ask you to pay up-front fees before services have been rendered. If you are having your credit repaired, payments are not due until this service has been completed. In addition, predatory lenders may ask for exorbitant fees for their services, so be sure to research what reasonable rates you should be looking for.
There’s seldom full disclosure with a predatory lender
Predatory lenders won’t be willing to reveal to you all the fine print in your loan, refinancing or credit repair. Instead, there may be hidden fees, interest, or the lender may try the old bait-and-switch scheme, convincing you to select one option and then switching it out for another, more expensive, alternative. Be sure to ask questions and read the fine print before signing anything.
Wise consumers research their options to avoid loan fraud
Before considering refinancing, a loan or credit repair, shop around with various lenders first. The U.S. Department of Housing and Urban Development advises this essential step for consumers to guarantee that they are getting the best deal available and to verify that they aren’t being taken advantage of by a predatory lender.
Reading the fine print, researching various loans and lenders, understanding your financial limitations and setting realistic expectations can prevent you from becoming a victim of predatory lending and loan fraud.
