The author is a Vancouver mortgage broker with an interest in all things finance.
For time past, lending has been used to acquire money or profit double than your capital. In fact, there are laws against loan usury that are imposed to limit this system. But there are instances of lawlessness and your wit must be imposed to avoid these abusive lending practices.
Try to look to observe instances of these loan practices to avoid:
1. High interest rates. You should avoid instances of unjustified high interest rates. Some lenders impose over priced interest rates. Most of these over-priced interest rates are said to be justified for the credit worthiness of the person. The worthiness of the person for a loan affects the interest that will be imposed over the loan. This form is abusive because of it discriminatory interest imposition and the high interest rates regardless the regulations.
2. Insurance. Practiced by most so-called cooperatives, the insurance of the member when he dies will be paid by every member of the cooperative. This is not real death insurance but a mere surface of a money making activity. The bigger the scope of the lending institution, the more people will the insurance. More often, the “insurance lump sum” is lower than the actual members’ contribution.
3. Un-disclosure of the terms. It is very important that you know the mortgage terms that are binding the contract. Other lending companies tend to hide some aspects of the loan to get advantage of some careless borrowers. Terms including interest and foreclosure of property must be discussed thoroughly.
4. Over draft short term loans. Short term loans must have short term interest. Abusive lenders tend to use annual interest rates over the short term loans. Plus, overdraft fees will be imposed over the loan package en warrants short term activities.
It is very important that you carefully know the aspect of the loan that you are getting to be sure that abusive lenders cannot get your investment.