How To Avoid Predatory Lending

How To Avoid Predatory Lending?

For many federal employees, getting loans is one of the most obvious solutions to deal with huge unexpected expenses. But, due to the urgency of the situation, some may fall victims to predatory lending.

What It Is?

Generally, this type of lending refers to an unfair and deceptive practice. If an individual gets a loan from a predatory lender, they may end up having to deal with very high interest rates. It usually ranges from 1000% to 400%.

The access to quick cash makes this option appealing to many federal employees. Some may even think that there is no other federal employee loan program they can turn to. What they fail to realize is that it can be a financial trap that takes them into a cycle of debt.

Warning Signs to Look For:

Knowing what signs to look for can help an individual avoid predatory lending. Here are some of them:

• High-interest rates

• Hidden fees

• A promise of no credit check in exchange for large collateral

• Asks for access to the borrower’s bank account for automatic deposits or withdrawals

• Research is key. It all starts with proper research. While you may be in a hurry to get funds, you should not sacrifice this step. It is necessary to check the terms and conditions. What do its previous customers say? It would also help to compare different lenders. Doing this can help determine which are legitimate lenders and which are a bit suspicious.

• Review the proposed contract. Signing the contract will bind an individual to the agreement. That makes the deal final. Read the entire contract thoroughly and clarify aspects that seem vague. Make sure it reflects what was discussed.

• Resist harassing door-to-door solicitations or phone calls. Aggressive offers are often a bad sign. Most licensed lenders do not make loan offers through door-to-door solicitations and incessant calling.

• Reject three-digit interest rates. As stated earlier, a big warning sign of predatory lenders is having high interest rates. To find the best loan program for federal employees, check if the offered annual percentage rate (APR) falls under best practices.

How to Avoid Them?

Aside from knowing the signs, being extra careful and doing your part as a borrower can help you avoid these lenders.

Getting Help!

Finding the best federal employee loan program need not be a difficult experience. Some lenders offer options specifically for federal employees.

For instance, we offer an accessible federal employee loan. A borrower can easily apply for a loan in the comfort of their home. Contact us to find out more about our services.

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