Don’t take the bait when predatory lenders try to reel you in.

Recognizing and avoiding these scams can save you many financial headaches in the future, including high debt, ruined credit and even the loss of your home.

Predatory lending typically refers to lending practices which impose deceptive, unfair or abusive terms to borrowers. Many of these practices are illegal. Others are legal, but not in the borrower’s best interests.

Common predatory lending techniques include payday loans, car title loans and subprime mortgages.

Creditors often target those with limited financial resources and those who need emergency cash (e.g., paying medical bills, making a home repair, car payment) or even victims of natural disasters. And it’s not just criminals who practice predatory loan tactics. Sometimes creditable banks, finance companies and other retailers can practice these deceptive tactics.

Watch for exceedingly high interest rates or inflated fees that are additional to the loan’s interest rate.

Always look carefully through the entire loan package. Ask for an explanation of fees, charges or terms and conditions if you are not comfortable with them. The Truth in Lending Act protects consumers and legally requires lenders to provide you with loan cost information so that you can comparison shop for loans.

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