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Predatory lending / loan shark

Predatory lending/loan shark is a term that is being used in a derogatory way. Predatory lending/loan shark is being used to explain such malpractices of lenders that are being known as deceitful, misleading or even unjust during the time of organization of loans. A person who wishes to take any kind of legal action against those people who are engaged in predatory lending / loan shark would fail to do so since there are no particular laws against it. But many federal agencies are there who are often seen to be using such a term of predatory lending / loan shark against any kind of activities which are regarded to be illegal in the business of loan.


In the industry of mortgage and consumer lending there are many corrupt lenders, who always take undue advantage of those borrowers in regard to predatory lending / loan shark. This is because these kinds of specific borrowers do not have much knowledge about the practices of borrowing. Consequently these borrowers are often seen to be made to fall into traps as they are made to agree to terms that are not much sought-after as well as destructive to the financial setup. Those type of borrowers who are very desperate about acquiring loans and who would agree to any kind of conditions to obtain it are more likely to be targeted by the lenders of predatory lending / loan shark.

The lenders of predatory lending / loan shark, aims at those groups of people who does not have good position, in respect to finance. Therefore it is those people who have a low income along with women, minorities and even senior citizens are often targeted by lenders of predatory lending / loan shark. But there is no definite or particular group, levels of income, backdrop who would be targeted by lenders of predatory lending / loan shark.

Lending processes that are short term in nature are not the only options for predatory lending / loan shark. But the lenders, who are often regarded to be dishonest and are engaged in predatory lending / loan shark, provide the loans to the borrowers at a rate of interest that are high. So it is often seen that the borrowers are thus compelled to get agreed to such terms and conditions which are harmful as well as unjust. This kind of conditions could be best explained by setting an example. The borrowers are made to agree to such loan agreements by the predatory lending / loan shark lenders which are corrupt penalties of prepayment or balloon payments. Borrowers fail to understand the language used in such loan agreements since more and more of technical terms are used in them. The other kind of loans which can be another good example for predatory lending / loan shark is the consumer loans which are assisted by guarantee. Most of these consumer loans have a high rate of interest and the borrower are also required to provide their car and at other times houses as a security basis. Cases in which the borrower fails to pay back the loan then the lender would simply take hold of these properties of the borrowers and sell it to pay back the loan. The lender makes a mere profit when the amount of the property sold by him is much more than the loan offered to the borrower.

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