Predatory Lending: Just Because You Can Borrow Big Bucks Doesnâ€™t Mean You Shouldâ€¦
Weâ€™ve often said on this site that â€œno one cares more about your money than you.â€ While this is the truth, it may not exactly be the whole truth. In reality there are a lot of people out there that care a great deal about your money, perhaps just not in quite the same way as you. Although not quite as concise, perhaps we should update this favorite phrase of ours to state â€œeveryone cares about how you spend your money, but no one cares more about keeping it safe than you doâ€¦â€ or something along those lines. At the end of the day, youâ€™ve got to be a self advocate and be responsible for making your own good decisions, regardless how many people out there are trying to take a share of your hard-earned money.
One specific way this trend has presented itself is through predatory lending. Predatory lending occurs when lenders convince borrowers to take out loans worth more money than they can truly afford. This causes problems because, as Wikipedia states, â€œPredatory lending often occurs on loans backed by some kind of collateral, such as a car or house, so that if the borrower defaults on payment, or even if he doesn't default, the lender can repossess or foreclose and profit by selling the repossessed or foreclosed property.â€
The more I hear about this problem in the media, the more convinced I am that it is becoming more and more widespread. In a society accustomed to instant gratification, predatory lending works for some lenders because consumers want the high-priced items they often cannot afford and are willing to borrow large sums to get them.
A recent article on MSN discusses this very topic and provides some tips on how to keep yourself out of trouble. Some of the best advice you can follow is to remain disciplined with your spending and err on the side of caution when signing up for a loan. Finally, at the risk of sounding cynical, remember that if a loan (or any other offer) seems too good to be true â€¦ it probably is.