Summary of Predatory Lending

Anything that offers immediate relief will be attractive to people. Immediate relief (instant gratification) addresses the human problem of how to get the resources we need in life. But human nature often lags when it comes to looking beyond immediate needs to see the real costs of these convenient choices and this instant gratification. That’s why we must educate ourselves about the choices that we make. Which ones are truly good choices? Which ones are not? Which ones look good at first but become nightmares down the road if we don’t handle them responsibly?

Payday loans, pawnshop loans, title loans, check-cashing shops, prepaid debit cards, rent-to-own stores and tax refund loans are some of the major forms of predatory lending about which you should be aware.

It’s your job to handle your money wisely and help it grow so that it serves you well throughout your life. One thing that our older friends and relatives can tell us with certainty is that money can drain very quickly when you don’t use it wisely. This draining happens to rich people as well. If you are faced with a need for immediate cash, be sure you know all your alternatives before you make your choice.

To help you with loans, consider the following activities that you can do.

Things to do

• Always read the terms, rates, and fees of any loan—bank loan, credit card, pawnshop loan, etc.
• Ask yourself whether you fit the profile of a payday loan borrower.
• Ask your bank or credit union whether it offers emergency loans.
• If you are behind on your bills, call your creditors and talk about your options.
• Create a budget that shows your sources of income and all your usual expenses. Use this for your financial planning so you can anticipate when you will run into money problems.