Predatory lending doesn't get enough attention. Unfair, deceptive, and fraudulent lending practices are surprisingly common and they're often aimed at the people who need help the most. Here are four tips to help you protect yourself:
1. Speed is not always a good sign.
Legitimate lenders take time to understand your business, review your finances, and make sure you can actually afford to repay them. A lender who funds you in 24 hours didn't do that work. Predatory lenders will fund almost anyone, because their terms are designed so they profit regardless of what happens to your business.
2. Beware of pressure.
If a lender is pushing you to decide quickly or making you feel like you'll miss out if you don't sign today, slow down. Urgency is a tactic. Any lender worth working with will give you the time you need to make a good decision.
3. Never sign something you don't fully understand.
Financial contracts can be complicated. Before you sign, make sure you understand what you're agreeing to, what it will cost you, and what happens if something goes wrong. If you're not getting clear answers, that's your answer.
4. Always trust your instincts.
If something feels off, it may well be.
