What does ‘predatory lending’ involve?

Study for the FCCLA Consumer Rights Test. Use flashcards and multiple-choice questions, each with explanations and hints, to become proficient in consumer rights. Prepare effectively for your upcoming exam!

Predatory lending involves unfair, deceptive, or fraudulent practices during the lending process. This can include tactics such as hidden fees, excessive interest rates, or misleading terms that can trap borrowers in cycles of debt. Predatory lenders often target vulnerable populations, such as low-income individuals or those with poor credit histories, exploiting their financial situations to impose unfavorable lending conditions that can lead to significant financial hardship.

In contrast, options that imply generous or standard lending practices do not align with the notion of predatory lending, as they represent ethical lending behavior that abides by legal standards and seeks to support borrowers rather than exploit them. Additionally, while high-interest rates could be a characteristic of predatory lending, the term itself encompasses a broader range of unscrupulous tactics beyond just the costs associated with loans.

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