Predatory lending is any unfair practice that benefits the lender at the expense of a borrower’s ability to repay the loan. Especially in light of all the uncertainty in the economy right now, the conditions are primed for predatory lending scams that were common before and during the financial crash of 2008.

            There are a number of warning signs and red flags that a consumer should be aware of. These include, but are not limited to:

• High interest rates, especially if they are much higher than current rates in the marketplace. A borrower’s credit history will impact what rates they are eligible for, but you should always shop around and look for the lowest rate you are entitled to.
• Excessive fees and costs associated with the loan. Predatory lenders will often charge high fees associated with the loan and may try to hide these fees. Make sure you understand all fees and ask questions if you think a fee seems improper.
• Loans that do not require a credit check of proof of income.
• The lender had a bad reputation or does not seem professional in some way.

            Borrowers may be more desperate than usual right now, especially if they are struggling to the pay their mortgage or other bills. This is exactly when these loans may seem most attractive. The best way to avoid being sold a predatory loan product is to ask a lot of questions, do your research and seek the advice of a certified housing counselor or attorney that can help you better understand the situation and make sure you do not end up in an even worse financial predicament.