Predatory lenders promise loans that are "too good to be true" and pressure borrowers to take them on the spot. Here are a few things you or your family and friends should know about spotting and avoiding predatory loans:
How to Spot a Predatory Loan
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Balloon payments.
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High interest rates.
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Monthly payments you can't afford.
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Penalties for early payoff of the loan.
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Unauthorized refinancing of your loan.
How to Avoid a Predatory Loan
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Always shop around.
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Ask questions. If you don't understand the loan terms, talk to someone you trust to look at the documents for you.
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Don't trust ads promising "No Credit? No Problem!"
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Ignore high-pressure sales tactics.
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Don't take the first loan you are offered. Remember that a low monthly payment isn't always a "deal." Look at the total cost of the loan.
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Be wary of promises to refinance the loan to a better rate in the future.
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Never sign a blank document or anything the lender promised to fill in later.
Source: Center for Responsible Lending
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