Avoiding Predatory Lending in Native Communities

Predatory lending practices often target vulnerable communities, including Native Americans. These lenders offer loans with high-interest rates, hidden fees, and unfair terms, trapping borrowers in a cycle of debt. This guide provides information and strategies to help you identify and avoid predatory lending, protecting your finances and building a stronger financial future.

What is Predatory Lending?

Unfair and Deceptive: Predatory lending involves unfair or deceptive loan terms that are designed to exploit borrowers.

High-Interest Rates and Fees: These loans often come with extremely high-interest rates and hidden fees, making them difficult to repay.

Targeting Vulnerable Communities: Predatory lenders often target low-income communities, communities of color, and those with limited access to traditional banking services.

Common Types of Predatory Lending

Payday Loans: Short-term loans with extremely high-interest rates, often due on your next payday.

Car Title Loans: Loans that use your car title as collateral. If you can't repay, you risk losing your vehicle.

Tax Refund Loans: Loans that advance your tax refund, often with high fees and interest rates.

Some Online Loans: Be cautious of online lenders offering quick cash with little documentation. They may have hidden fees and unfavorable terms.

How to Protect Yourself

Recognize the Signs: Be wary of lenders who pressure you, require you to borrow more than you need, or don't clearly disclose loan terms.

Read the Fine Print: Carefully review all loan documents before signing. Pay attention to interest rates, fees, and repayment terms.

Explore Alternatives: Consider options like credit unions, CDFIs, or borrowing from family or friends.

Build Your Credit: A strong credit score can help you qualify for more affordable loans from reputable lenders.

Seek Financial Counseling: NFDC offers financial counseling services to help you make informed decisions and avoid predatory lending.

Empowering Native Communities

Community Awareness: Share information about predatory lending with your family, friends, and community members.

Support Financial Education: Encourage financial literacy programs in your community to help others understand and avoid predatory lending practices.

Advocate for Change: Support policies and initiatives that protect consumers from predatory lending.