Consumer beware

Predatory lenders deceive, manipulate, pressure or engage in fraud to get a borrower to take out a loan. A predatory loan has terms that put the borrower at a big disadvantage, and usually has excessive interest rates and hidden terms and costs that the borrower does not understand.

Predatory lending abuses could be found in any kind of institution, but such abuses are often associated with rent-to-own contracts, pawn shops loans, payday loans, subprime mortgages, tax refund anticipation loans, overdraft loans and car title loans. New predatory lenders, including online lenders, are popping up every day.

Asking the right questions before agreeing to a loan can help you fully understand what you are committing to. Consider asking questions like these before applying for any kind of loan:

Questions specifically for pawn shops:

Any reputable and honest lender should be more than happy to answer your questions. Their hesitancy to do so is a red flag. If possible, get information from at least three lenders before making a decision to borrow. You may decide that every store’s fees are too high and rethink the loan. Sometimes waiting to spend the money or coming up with it another way may make more sense once you fully understand the costs.