Members of the military make significant sacrifices to protect our country. They leave their homes, families, and everything familiar to them to defend the rights of U.S. citizens. When military members return home, many face challenges related to their finances. Unfortunately, lending companies are aware of this and take advantage of their vulnerability via predatory lending.
If you’re a member of the United States Military or know someone who is, becoming educated on predatory lending and the steps you can take to protect yourself is essential.
What is Predatory Lending?
According to debt.org, predatory lending is defined as:
“Any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want or can’t afford.”
Lenders that practice predatory lending force borrowers into loans that are nearly impossible to repay. Predatory loans often have:
- Undisclosed fees
- High interest rates
- Balloon rates
- Abnormal prepayment penalties
- Unnecessary additional products (like insurance)
As you can see, predatory lending has the potential to cause devastation to the lives of its victims. Some of the most extreme consequences of predatory lending include repossession, foreclosure, and bankruptcy.
Examples of Predatory Lending
Recently, MSN Money illustrated the severity of predatory lending in an article where they discussed how military members had been taken advantage of following deployment by being forced into loans with sky-high interest rates and principal amounts well above what the collateral was worth.
The most common types of loans subject to predatory lending include:
- Payday loans
- Car loans
- Home mortgages
Here is an example of predatory lending:
A military member returning from service is in need of a vehicle to get to and from their new job. The car dealership knows the military member desperately needs this vehicle and isn’t sure of their ability to obtain a loan or common car loan.
The car dealership sells a vehicle to the military member at a price well-above value at an extremely high interest rate. The car dealership also adds on other products such as insurance and maintenance packages without the military member’s knowledge. In the end, the payments for the car are much higher than the military member can afford and create debt they can’t get out from under.
How Military Members Can Protect Themselves from Predatory Lending
Military members who fall victim to predatory lending should not be ashamed. Predatory lending practices are often difficult to spot and very easy to get caught up in. There are, however, ways you can protect yourself for the future. Some of the best methods of protection from predatory lending include:
- Knowing how much of a payment you can afford
- Understanding typical loan terms
- Asking questions
- Asking for help
Taking these steps to educate yourself before applying for a loan will help ensure you don’t get into a financial situation you can’t afford. Likewise, educating yourself will protect you and your family from facing further hardship at the hands of predatory lending.
Bankruptcy Attorneys That Military Members Can Trust
If you’ve become the unfortunate victim of bad faith tactics like predatory lending, there’s still hope. A trustworthy and knowledgeable bankruptcy attorney can help get you back on your feet. At E. Orum Young Law, we are bankruptcy specialists who are experts in both Chapter 7 and Chapter 13 bankruptcy. With more than 35 years of experience, we have helped thousands of families obtain financial security after hardship.
To schedule your free case review with the attorneys in our office, call 318-450-3192 or use our online form. We look forward to meeting with you soon and helping you achieve the life you deserve.