What is a common characteristic of predatory loans?

A common characteristic of predatory loans is the presence of excessive additional fees and unfavorable terms. These loans often exploit borrowers by incorporating high-interest rates, hidden fees, and other unfavorable conditions that significantly increase the cost of borrowing. The structure of such loans is designed to trap borrowers in cycles of debt, making it difficult for them to refinance or pay off the loan.

Predatory lending practices include things like charging exorbitant fees that are disproportionate to the amount borrowed and adding conditions that are highly unfavorable to the borrower. This predatory behavior ultimately leads to financial distress for the borrowers, who are often already vulnerable or in desperate need of funds.

This understanding helps one to recognize the signs of predatory lending and underscores the importance of careful scrutiny of loan terms before entering into an agreement.