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Predatory Lending

Definition - What does Predatory Lending mean?

Predatory lending is a practice where lenders attempt to manipulate or defraud borrowers into accepting loans that are potentially very hazardous for the borrower. These loans could be hazardous because they come with extremely high interest rates, because they have lots of fees, or because they otherwise present risk to the borrower.

Justipedia explains Predatory Lending

A borrower who gets caught in a predatory lending scheme can suffer severe consequences. He or she can quickly find himself or herself under a mountain of debt, paying exorbitant fees, and watching his or her credit score fall if late payments are made. In a worst case scenario, a borrower could be foreclosed on, or have his or her assets stripped if he or she defaults. For these reasons, it is wise for borrowers to thoroughly investigate any potential loans that they are considering.

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