What are four signs of predatory lending?
Predatory lending practices involve unfair, deceptive, or fraudulent loan terms targeted at vulnerable borrowers. Four primary warning signs include first, charging excessively high interest rates, exorbitant upfront fees, and hidden points that far exceed standard market pricing. Second, lenders engaging in loan flipping, which repeatedly pressures borrowers into refinancing existing loans to generate excessive new fee revenue without providing tangible financial benefit. Third, steering borrowers toward high-cost subprime loans even when their credit scores qualify them for prime, lower-rate alternatives. Fourth, aggressive bundling of mandatory, high-priced credit insurance or unnecessary financial products directly into the loan principal.
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