Predatory Lending is common and it can definitely negatively impact you and your life. For example, 3% interest vs 35% interest is a huge deal. There is a name for this scenario and it is called Predatory Lending. What is it exactly? It when someone lends you money that has unfair abusive loan terms for the person receiving the money. They may look good at the time because you need the money. But what happens when you receive the money and cannot pay it back? It can really hurt and sometimes roll over into impacting your personal life and finances. Avoid Predatory Lending opportunities at all costs. When students reach a certain age, they will receive credit card offers. Now is the time to teach your kids and students on what not to do with different types of loans and funding. Have them ask theses questions before deciding to take a predatory loan.
- Have I exhausted all my options for funding?
- If I take the money, will I actually be able to pay it back?
- Are the interest rates feasible?
- How long will it take me to pay it back?
- Do I have a realistic plan to pay it back and continue to pay everything else?
- Is it really worth it?
If your student or child ask these questions and still decide to take a predatory loan, make it a priority to pay the money back as soon as possible. Let them know to never lose sight that they are taking a huge risk, so stick to the plan. Building wealth can be hard, but getting into uncontrollable debt is easy.