Definition of Predatory lending:
Predatory lending includes any unscrupulous actions carried out by a lender to entice, induce, and assist a borrower in taking a loan that they otherwise are unable to pay back reasonably. In many cases, a predatory loan is often one that carries high fees, a high-interest rate, strips the borrower of equity, or places the borrower in a lower credit-rated loan to the benefit of the lender. As with most things of a dishonest nature, new and different predatory lending schemes frequently arise.
As the name implies, predatory lending typically preys on those who are desperate for a loan, or otherwise naive enough to fall prey to some of these confusing or seemingly simple tactics. Predatory lenders take advantage of these people. For example, a common predatory lender is a loan shark, someone who loans money at extremely high interest rates and can even threaten violence to collect on their debts. While loan sharks are relatively unregulated (and can be tied to other organized crime groups), other more established institutions including mortgage brokers, attorneys, or real estate contractors can also practice predatory lending schemes.
Using multiple shady lending methods to dupe and benefit from unsuspecting borrowers.
How to use Predatory lending in a sentence?
- Predatory lending is the practice of a lender employing unscrupulous tactics to entice, induce, and assist a borrower in taking a loan that they otherwise are unable to pay back reasonably.
- Many predatory loans have high interest rates, high fees, and are designed to strip the borrower of equity. They typically target poor or less educated populations who may unexpectedly fall into their traps.
- Predatory loans should not be confused with redlining, which restricts certain services to individuals based on race, ethnicity, or their area of residence.
Meaning of Predatory lending & Predatory lending Definition