Predatory Lending Warning Signs
Predatory lenders rely on speed and confusion. Slowing down to check nine items before you sign protects you better than any regulator.
Nine red flags
Walk away if you see two or more:
- APR above your state's usury cap
- Pressure to sign today / 'rate good for one hour'
- No clear APR disclosure (TILA box) on the contract
- Mandatory ACH access to your checking account
- Balloon payment at the end of the term
- Prepayment penalty
- Loan flipping — refinancing a still-current loan with new fees
- Mandatory arbitration with a no-class-action clause
- Lender not licensed in your state (check your state regulator)
What to do if you've already signed
Most states give you a 3-day rescission window on certain consumer loans. File a complaint with the CFPB and your state attorney general — both are free and routinely produce refunds.
Questions
Frequently Asked Questions
Clear answers to common questions before you compare loan options or apply.
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Reviewed by Jeff Arlintogs. See our fact-checking policy.