Why Lenders Are Taking Advantage of the System

There is a domino effect that can occur when inflation desperation leads to taking out loans. High inflation and low employment rates cause spenders to dip into their savings and take out loans, looking for these loans leads to lenders coming out of the woodwork - some of whom don't always have your best interests in mind, and falling prey to the predatory lenders can leave you in a deeper hole than you started in.  

With our nation’s current financial situation, taking out a loan may be unavoidable. But, if you do your research and know what to look out for, you’ll find a loan that will help you rather than harm you.

1. If It Looks Too Easy, It’s a Scam - Unethical lenders’ motto is “fast and easy”. They’ll tell you all they need is an income source, a bank account, and proof that you’re over 18. If it feels too easy, it is probably too good to be true. 

2. Read Everything - Some lenders are smooth salesmen and will make terrible terms sound like a steal. Read your contracts. If you don’t understand something, make sure you ask about it. Do not sign anything until you are confident in the agreement you are making. 

3. Do Not Let Anyone Convince You to Borrow More Money Than You Know You Can Repay - Go over your finances and set boundaries for yourself. Taking out a loan you cannot pay off will lead to roll over charges or refinancing your loan which will result in a cycle of debt. 

4. Do Not Let Anyone Convince You to Lie - If they ask you to overstate your income, falsify documents, or make false statements of any kind they are setting you up for failure.

5. Pay Close Attention to the Interest Rate - These lenders love a high interest-rate. They’ll try to rope you into a three-digit interest rate, but if the interest rate is higher than what your credit score qualifies for, don’t take it. They may also try to sell you on a lower interest rate racked with fees and other additional charges. 

6. Make Sure They Say It to Your Face - Unlicensed lenders may try to make offers online or over the phone. When it comes to loans, make sure you are in an appropriate setting.

   

You become an easy target if they think you do not know better. At Financially Fit Employees we offer great resources to be able to read and understand loans and how they can affect your credit score. 

Here to Help,

Your Financially Fit Team