Swimming In Shark Infested Waters

How to Avoid Predatory Lenders

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Like any master predator, sharks can smell their prey from miles away - so can predatory lenders. What is predatory lending? According to this article from Business News Daily, predatory lending is when “money lenders use unfair, deceptive or fraudulent practices to entice borrowers, typically those most in need of cash, into taking a loan from them, whether it be for homes, cars or everyday expenses.” If you think you’re being stalked by a predatory lender and find yourself swimming in shark infested waters, here are a few ways that you can protect yourself:

  1. Do your research. If you’re in need of a loan, don’t just take the first deal that comes along. Take a look at loans from several lenders, compare and contrast their terms, and ask any questions that you may have. By taking a look at loans across the market, it’ll help you decipher which lenders are legitimate and which ones seem a little fishy.

  2. Never sign a contract unless you’ve read and understand it. Once you’ve signed your name to something, it can be very hard to get yourself out of it, so never sign anything unless you’re 100 percent certain of what’s being asked of you. Many predatory lenders will make the terms in the contract different than what you discussed in person or leave blanks to be “filled in later.” Take extra time and know what you sign.
  3. Watch out for harassing phone calls or door-to-door solicitations. Most reputable licensed lenders will not make loan offers through the mail, over the phone or by door-to-door solicitation. If you receive these types of offers, they could potentially be coming from an unlicensed lender and are best ignored.

  4. Beware of three-digit interest rates. One of the biggest warning signs of predatory lending is three-digit interest rates. With high-interest loans, balances quickly grow higher than the consumer can handle, and they end up being trapped in a revolving cycle of debt.

  5. Trust your instincts. If a deal sounds shady or too good to be true, then go with your gut and walk away. Many predatory lenders are slick salesmen and are good at selling a loan and not telling you the whole truth. If it doesn’t sound right, then don’t do it.


It can be tricky trying to navigate predatory waters, but if you armor yourself with knowledge and what to look for, you won’t have to worry about being taken advantage of. Be smart in your lending practices, and always follow your gut – if it feels wrong, then it probably is.