What are payday loans and other types of robbery loans? – USA TODAY | CarTailz

Financial watchdog groups have raised concerns that predatory lenders are taking advantage of low-income Americans who need quick cash while rising inflation weighs on consumers.

So what is a robbery loan?

Robber loans impose unfair or abusive credit terms on borrowers, including triple-digit interest rates and tight repayment windows. Meanwhile, “fair” credit guarantees all consumers equal credit opportunities, including low-cost credit for those with good credit, according to federal guidelines.

A predatory lender can also persuade a borrower to accept unfair terms through fraudulent, extortionate, exploitative, or unscrupulous acts, according to Orlando-based Debt.org, an online site that provides advice from financial experts. An example is lenders reaching out to borrowers with credit problems or who have recently lost their jobs.

Predatory lending practices can also include fraudulent, deceptive, and unfair tactics that lenders use to “fool” consumers into making loans they cannot afford, according to the US Attorney’s Office for Eastern Pennsylvania, which cites high mortgage costs as contributing to borrowers People who cannot afford to keep their homes in good condition.

A person rides a scooter past a check cashing and payday loan store in downtown Los Angeles on March 11, 2022.
PATRICK T. FALLON/AFP via Getty Images

The Center for Responsible Lending, a North Carolina-based nonprofit research organization dedicated to ending predatory lending, released a study in late September examining the “persistent harms of expensive consumer loans,” a form of predatory lending that “Rent” includes “a-bank” loans. The group says they found robbery loans had a greater impact on people of color and low-income people.

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