Predatory Lending HORROR STORIES: How they lie to you (1/3)
Posted on: 21 August 2017
Here at Fig, we talk a lot about payday lending and how it can be predatory lending. You’ll often hear politicians, financial coaches, consumer advocates, and a whole lot of other people toss around the term without really thinking about it. What, exactly, makes a loan “predatory”?
Predatory Lending Means Deception
Case #1: Corinthian College vs. CFPB
Predatory loans will downplay their risks and costs and play up their benefits. In a lot of cases, these will be done using made-up statistics. You’ll also see “yo-yo” schemes, a kind of bait-and-switch scam where you’re offered a cheap loan up front, only to be told a few days later that you’re only eligible for a high cost loan later. For example, students of Corinthian College were lied to about job placement and how likely they were to default, and they were encouraged to take out loans much more expensive than they could have gotten from other lenders.
Here at Fig, we pride ourselves on being transparent. We give you our loan products, tell you exactly how much they’ll cost and for how long. When we tell you your loan will show up on your credit report and help you build credit, we mean it. However, predatory loans almost always use deceptive advertising to talk up their benefits and downplay their costs.
Protect Yourself From Predatory Lending
Predatory loans target people who have bad credit, the elderly, and people who are struggling financially. In a perfect world, everyone would have enough time and energy to do all the research they need to make the best decision. But even if you don’t have time to do a ton of research, everyone that might be hurt by predatory lending should at least try to read the fine print, consult a financial coach if you’re unsure of what the best loan product available is, and read the reviews of any lender who you’re considering for such an important financial decision.