Predatory lending is any lending practice where the borrower is taken advantage of by the lender. Predatory lenders impose lending terms that are unfair or abusive. This predatory practice is often committed against victims who are elderly or low-income.
Examples of predatory lending include failing to disclose information or disclosing false information, high interest rates or fees, and risk-based pricing. These actions, and a variety of other practices, either individually or in concert, further a predatory lender’s goal of the loan ultimately not being paid back and the debtor defaulting. Legislation has been passed to regulate this industry – see below federal material.
15 U.S.C. Chapter 41, Consumer Credit Protection
15 U.S.C. § 1691, Equal Credit Opportunity Act
[Last updated in July of 2020 by the Wex Definitions Team]