When it comes to borrowing money in an emergency, there are a number of challenges that low credit borrowers face. All of us need money from time to time, and when you need to borrow urgently, it’s important to find a reliable lender that has your back.
Unfortunately, many lenders take advantage of this situation by engaging in predatory lending practices and conning their borrowers. These practices can show in the form of huge interest rates, hidden fees, high-pressure sales tactics and, in some cases, aggressive recovery practices.
This can not only make the borrower’s financial situation worse but also lead to great mental stress.
To the untrained eye, predatory lenders may seem identical to reputable lenders at first.
That's why, today we bring you this article to help you recognise the signs of predatory lending early on and avoid such lenders effectively. This can not only help you deal with your money problems headfirst but also lead to a safe and strong financial future.
Let us explore the world of unfair lending to protect ourselves and our loved ones from the neverending cycle of debt.
1. Research Your Lender
Our top tip to avoid predatory lending practices is to avoid predatory lenders. Not all lenders you find will have the same set of ethical values or follow the right regulatory guidelines.
That’s why it becomes essential to research your lender before applying for a loan. As a minimum, you want to check if the lender is registered and regulated by the Financial Conduct Authority (FCA). Furthermore, it’s important to research reviews and look at the business on search engines to find out how their customers rate them.
It’s also best to avoid lenders that require upfront fees, have disproportionate application charges, or require unnecessary personal information. These are all red flags to avoid, and could end up harming your financial health.
2. Read the Fine Print
Probably one of the most widely suggested and practised strategies to avoid getting conned, reading the fine print can save you from disaster. Regardless of whether it is a loan, purchase or any other important agreement, it is absolutely essential that you thoroughly read the terms and conditions. Especially when it involves money.
Terms and conditions aren’t known for being an easy read, so if you’re having trouble, there’s no harm in asking a friend or family member to take a quick look on your behalf.
Pay close attention to any hidden fees, extra charges and interest rates, and only accept the loan after a thorough review. If you have questions or concerns, do not hesitate to get some professional advice.
3. Don't Borrow More Than You Can Afford
To effectively avoid predatory lenders from causing you harm, an important tip is to only borrow what you can afford to repay. Given the lack of low credit loan options available on the market, many borrowers fall victim to the alluring promise of “money on demand”. However, often this can cause greater loss and financial insecurity in the future.
By carefully examining your needs and creating a realistic budget, you can ensure that you are only borrowing what you can repay, without any stress. However, while creating your budget, make sure you leave room for the possibility of unexpected expenses. Thereby allowing you to avoid any extra hidden fees, late repayment charges, etc.
Choose Salad Money For Fair and Affordable Personal Loans
Now that you know how to identify and avoid predatory lending practices, you can actively assess your lenders and make an informed decision. Not only will planning ahead help you build a better financial future, but also actively prevent you from the dangers of predatory lending.
Moreover, if you ever find yourself in a situation where you are in urgent need of emergency funds, you can rest assured that Salad Money has your is here to help..
As one of the largest CDFI consumer lenders in the UK, we can offer you fair and affordable loans, with loans specially designed to offer support to public and private employees who have been wronged by the credit score system.
We believe that the credit score system can be unfair and an imperfect metric to assess your creditworthiness. That’s why, with our unique affordability assessment based on our open banking system, we assess your ability to repay a loan and offer you the best possible support.
What’s more, as a regulated lender, we believe in open, transparent and fair lending practices. Applying for one of our new loans doesn’t impact your credit score. We use Open Banking in our initial assessment. If successful, we report your loan to the CRA’s (Credit Reference Agencies). Your credit score won’t hold you back from being eligible.
To learn more about our services, click here or get in touch with us now!
