One of the hardest part of buying property is trying to get a loan. Applying for a loan is basically going through the eye of the needle. The lender takes a look about almost anything about your life, from your current employment status to the amount of salary that youâ€™re getting. Itâ€™s a long process and in of course, you would want to get the best deals in the end of the transaction.
Unfortunately, loan sharks are there to scurry away the last flesh of money that youâ€™re holding. Predatory lending, in this day and age, is still a thing that scammers do to rip you off your money.
Whatâ€™s predatory lending, you may ask? Predatory lending refers to the unfair and unjust loan terms that the lender impose on the borrower. Itâ€™s also a way for a borrower to accept terms that may not be very beneficial to them. Itâ€™s very common here in the Philippines, especially if one is not really sure about the lender that he or she has chosen.
Predatory lenders often target those who are uneducated about both the law and the usual stipulations of a loan. Thatâ€™s why itâ€™s better for individuals to become aware of what predatory lending is all about. To help you, here are the tips and tricks on how you can pinpoint if someone is sharking you.
1. Big money:Â The first sign is when the lender seems to be collecting fees that seem to be inconceivable. For example, the lender tells you that you have a bad credit record. The lender will now tell you pay for extra fees so that your credit will clear out. Remember that creating good credit history is more than just paying fees.
2. Not letting you do your own research:Â Loan sharks wonâ€™t let you look at better options available. For example, you saw a better property that fits better for your budget. Your predatory lender will hinder you from making a sound decision on your own and will just give you options that will only benefit them.
3. More documents:Â Remember, once that you have signed up your loan you shouldnâ€™t be given another set of documents. This is a trick that loan sharks usually do to get your signature and use it for their schemes. Beware of documents that are blank and are said to be filled out later on in the transaction.
4. Prepayment penalties:Â Prepayment is when you opt for paying your loans earlier than the date that you and your lender have talked about. There are fees to be acknowledged during prepayment processes. Sometimes, your lender will take these fees as opportunity to get more money from you. Be aware of the real fees that come with prepayment before shelling out money.
5. Chosen demographics:Â Do a background check on the previous clients of your lender. If the lender is usually preying on old citizens or those who seem to be uneducated then back off. The loan shark often preys on the weak and the naive.
HOW TO AVOID PREDATORY TRAPS
1. Shop for a lender:Â Be aware of your options. Compare costs and research on each lendersâ€™ background. Memorize the signs mentioned above. Check out our agents in our portalÂ to see our list of the best of the best real estate agents. These people know what they are doing and will help you make better decisions
2. Be truthful:Â Do not make false statements on your application. The loan sharks may use the false clauses that you put on the application against you.
3. Look at the total costs:Â Discounted fees may sound great but they may be a bait to get your hard-earned cash.
Scams like predatory lending are everywhere.Â Itâ€™s better to be prepared and to shrug off the naivetÃ©. Be vigilant from these predators to keep you and your money safe.