Avoiding Predatory Lending Scams

Abusive or "predatory" lenders target people who are strapped for cash. But the loans they push usually have sky-high interest rates and fees. They're often illegal, too. You need to know how to tell a "good" loan from a bad one. Otherwise, you could end up paying too much, hurting your credit rating—and even losing your home.

Ask yourself:

Do I feel pressured?

• Watch out for harassing phone calls or solicitations from lenders who say they can give you next-day approval.
• The same goes for lenders who offer "guaranteed" low-interest loans—as long as you apply over the phone and pay them money today.

Have I shopped around for the best deal?

• Check with other lenders, including local banks, for their rates and total costs.
• Compare the interest rates and the total costs for your loan with those of other lenders.
• Beware of high up-front fees and percentage "points." They can turn a loan with low monthly payments into one that actually costs you more in the long run.

Is it too good to be true?

• Watch out for telemarketers, TV ads or door-to-door salespeople who offer easy or quick-approval loans for houses, cars and home repair but do not disclose the details. Read the fine print to make sure what you're told is what you're getting.
• Avoid lenders who say bad or no credit is "no problem." Lenders you can trust don't do business this way.

Do I understand the loan terms?

• Before borrowing, you should know exactly what you're getting and what you're paying. Never be afraid to ask the lender to explain any fees, terms or conditions you don't understand. And never sign a blank form.
• Make sure what you sign is what you agreed to verbally. Don't sign any contract that does not agree with what the salesperson presented.

The bottom line is that you should never sign a loan contract until you have all the facts—and understand every part of what you're signing. Ask for advice from someone you trust: a banker, an accountant or a family member or friend who has had experience with getting and paying a mortgage.

If you have been a victim of lending abuse, let others know! Your complaint could save others from being victims, too. Call your local office of consumer affairs or your state Attorney General's office, and report your experience to the Federal Trade Commission. It watches out for predatory lending scams and frauds. Go to www.ftc.gov to file a complaint online or call toll-free 1-877-FTC-HELP (382-4357).

Questions about Horizon’s lending practices? Visit us online or call us at 888-873-2640.