PREDATORY LENDING

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PREDATORY LENDING

• Be a SMART Consumer!

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WHAT ARE MY RIGHTS AS A CONSUMER?

• SAFETY
• SERVICE
• CONSUMER EDUCATION
• TO BE INFORMED
• TO BE HEARD
• TO CHOOSE

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Consumer Culturepages 45 - 47

• Ads-turning Wants into Needs
• Commercial pulls ads, malls, status, and kids
  (p 46)
• Use Rule of Three (p 46)
• Caveat emptor- buyer beware (p 47)
• You have rights (p 47)

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PREDATORY LENDING

• What is predatory lending?
• What are signs of a predatory loan?
• Cash or other incentives
• Income padding
• Balloon payments
• Large prepayment penalties
• Signing over your deed
• Unnecessary insurance

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PAYDAY LOANS

• Discussion
• What is a payday loan?
• Who uses payday loans?
• What is required to get a payday loan?
• How big is the payday lending industry?
• Who makes payday loans?

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COST OF A PAYDAY LOAN

• For a two-week payday advance, a borrower will
  pay at least 15 for every 100 borrowed.
• Loan fees are equal to roughly a 400 annual
  percentage rate.
• Costs 5 million Americans 3.4 billion annually.
• Societal Costs-borrowers struggle to pay other
  bills (rent, electricity and even groceries).

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COST OF A PAYDAY LOAN(see page 58)

• The typical payday loan is more than twice as
  expensive as a credit card late fee, and much
  more expensive than paying bills late.

The debt trap forces payday loan borrowers to pay
fees every two weeks. In the end, revolving
payday loan fees increase debt loads and
financial hardship, leading people into
bankruptcy rather than helping them get back on
their feet.
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SIGNS OF A PREDATORY PAYDAY LOAN

• Triple digit interest rate
• Short minimum loan term
• Single balloon payment
• Loan flipping (extensions, rollovers or back to
  back transactions)

• Simultaneous borrowing from multiple lenders
• No consideration of borrowers ability to repay
• Deferred check mechanism
• Mandatory arbitration clause

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ALTERNATIVES TO PAYDAY LENDING

• A payment plan with creditors
• Advances from employers
• Credit counseling
• Emergency assistance programs
• Overdraft protection at a bank or credit union
• Credit union loans
• Cash advances on credit cards
• Military loans
• Small consumer loans

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TYPES OF PREDATORY LENDING

• Rent-to-own
• Pawn Shops
• Auto Title Pawn
• Sale and Lease Back
• Auto Brokerage and Subleases
• Hard Money Leases
• Tax Refund Anticipation Loans

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TYPES OF PREDETORY LENDING, CONTINUED

• Voluntary Wage Assignment
• For Profit Debt Counseling
• Credit Repair Scams
• Get Rich Quick Schemes
• Telemarketing Scams
• Lottery and prize sweepstakes

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AVOIDING BORROWING PITFALLS

• Say NO to "easy money."
• Shop around.
• Understand the loan terms.
• Find out about prepayment penalties.
• Make sure documents are correct.
• Make sure documents are complete
• Ask about additional fees.
• Understand the total package.
• Work with credit counselors.
• If youre not sure, don't sign!

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FRAUD IDENTITY THEFT

• Identity theft is when someone steals your
  personal information to use for illegal purposes.
  It is a crime that can damage your reputation,
  and your peace of mind. You can reduce the
  possibility of becoming a victim by keeping your
  personal information secure.

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AVOIDING IDENTITY THEFT

• Guard your financial information.
• Keep your social security number confidential.
• Beware of imposters.
• Keep your mail safe.
• Get off credit marketing lists.
• Stay Safe online.
• Memorize your passwords and PIN numbers.

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AVOIDING IDENTITY THEFT, CONTINUED

• Lock it up.
• If you are on active duty in the military, put an
  active duty alert on your credit files.
• Check your credit reports regularly.
• Be cautious about offers for credit monitoring
  services.
• Help is a phone call or click away.
• Federal Trade Commission 1-877-438-4338
• Http//www.consumer.gov/idtheft

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Fair Credit Billing ActFair Credit Reporting
ActFair Debt Collection Practices ActFair and
Accurate Credit Transactions ActState consumer
fraud lawsHome improvementsCar salesMail
fraudTelemarketing