Loans give people the means to make big purchases and make payments over an extended period of time without the need to save all the money in cash first. However, loan agencies sometimes take advantage of consumers through fraudulent practices. Many people were affected by lending fraud during the period leading up to the big mortgage bubble burst. These people continue to feel the impact of unethical practices, including predatory lending and hidden interest and fees, and are now in serious financial trouble.
If a company offers a loan with unfair or abusive terms, they may be breaking the law. Examples of predatory lending practices include:
- Non-negotiable pricing: Borrowers are legally allowed to negotiate, but the lender presents the terms as non-negotiable.
- Prepayment fraud: Large fines for paying back the loan earlier than required.
- Changing terms: The borrower signs one set of terms, but the lender changes the terms before the loan closes.
- Balloon payments: A large payment is left at the end of the loan term.
- Hidden fees: Borrowers have a right to know how they will be charged for services and should not face surprise fees.
Many people feel lost when trying to take action against the unfair dealings of large lending corporations. Through filing a class action lawsuit, multiple individuals work collectively to take legal action against a company, rather than each person trying to file an individual case. This type of lawsuit helps people who have each faced similar damages take action against a large corporation when it doesn’t make financial sense to file separately.