Predatory Loans and How to Avoid Them
If you go through the litany of lenders online, you’d realize just how relentless some of them are. They could go as far as constantly sending you emails and making phone calls to you to take out loans. One thing that is pertinent to note when looking to take out a loan whether short term or long term is that you should always go to them and not the other way around. When people need to take out loans, they approach the lenders. They are not berated by lenders and asked to take out loans they do not need.
Predator and Prey
A lot of times it is easy to fall into the wrong hands when it comes to taking out loans. This is because they offer the monthly payment solution or they probably tell you that there won’t be a credit check. These are what you would call predatory loans. They are predatory because the people who take out these loans are more or less prey that have been carefully selected and subsequently enlisted. The reason these loans are predatory is that they are aggressive and the lenders have the assurance that you’d never be able to pay back the loan sum in the allotted time. So, you could say they carefully pick out their prey, push them into taking out these loans and watch them struggle to make the payments for long periods of time.
Something else they are good at is withholding information about the loan you are about to take out and ambushing you with the information later. So, you could take out a loan with a monthly payment of the interest and you’d never know there’s a requirement for a balloon payment in a few month’s time. Learning about this midway into the fourth month may mess up your credit history and force you to take out another loan to finance that one. Here are some of the red flags to look out for when you want to take out a loan.
Every loan facility should be concerned if you have the means to pay back their money. Therefore, they would naturally engage in credit checks of the people who want to take out loans. If they make it too easy and skip the credit check, then that’s a red flag.
If a lender emphasizes a lot on their monthly repayment method in their ads, chances are that this is to distract you from other stringent terms in the loan’s fine print, so be sure to understand the loan completely before signing up. Don’t get excited with just what they show you.
Long Term Loans
Be wary of long term loans because more often than not you will end up paying 200 percent of the loan sum with interest all because you took out a thousand-dollar loan with a 20-month repayment plan. So, when taking out a loan, be sure to go over the loan requirements and their fine print because a lot is hidden in those. Check if they are reputable lenders and get legal advice if possible.
If you are trapped in a predatory loan, you need help. The pro bono attorneys at The Debt Relief and Education Foundation are ready to help you get out of debt and get those collectors off of your back. Contact The Debt Relief and Education Foundation today for a free consultation.