3 Tips to Avoid Predatory Lending

Many consumers fall victim to predatory lending every single year. While the majority of lenders are reputable and honest, every now and then, you run across a lender that gives all the rest of them a bad name. Avoiding a predatory lender can help save yourself some money and a lot of problems. Here are a few tips for avoiding predatory lending in the future. 

1. Check Out the Lender

The first thing that you need to do when you receive an offer from a lender is investigate them thoroughly. In today's day and age, you can find out a lot of things about any company online. With most lenders, you should be able to get online and find out what type of company they are.

If a company engages in bad business practices, chances are you will find many angry people complaining about them online. Angry customers like to tell others about their experience. Therefore, if you do a search on a particular company and many people are talking negatively about them, you should probably go with a different company. There are plenty of reputable lenders out there for you to work with. You do not need to waste your time on a questionable one. 

2. Be Skeptical

This situation also calls for a little healthy skepticism. We are bombarded by loan offers in the mail almost on a daily basis. Lenders send out mass emails, pay for banner ads and do anything else that they can think of to get our attention. While most of the time, their efforts are in vain, sometimes you might need the money. When one of these unbelievable offers hits your mailbox and you start to consider it, take a moment and be skeptical. If the offer sounds too good to be true, there is a good chance that it probably is.

For example, you might see a billboard advertisement advertising their low interest rates. While it sounds great, if you dig a little deeper, you find out that the rate is only a six-month promotional rate. After that, the rate doubles and your payment goes through the roof. Or, the rate has a significant amount of points, or cost, to get the rate. Be very cautious about the promotional offers that you receive and check them out thoroughly before agreeing to any of them. 

3. Work With Who You Know

Most of us are familiar with a select few lenders that we know by heart. When someone mentions their name, you are familiar with it because they have been around forever. You have probably even done business with someone in the past that did a good job for you. However, we are always looking for greener pastures and as a result, often sign up for loans that are not in our best interests. As a rule, you should try and work with the familiar companies that you know. They are familiar for a reason. Companies that have been in business for a number of years are more stable and secure companies.

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