Obtain a Loan
Qualifications to Receive a Loan:
- Credit score and history.
- Income and job history.
- Debt-to-income ratio.
Predatory Loaning: When people are in dire need of money, they may be tempted to take out a loan from lenders who do not have their best interests in mind.
Examples of predatory lenders:
- Payday lenders
- Car title lenders
- Subprime mortgage lenders
How to recognize predatory loans:
- Extremely high-interest rates
- Hidden fees or charges
- Targeting vulnerable populations
- Aggressive marketing tactics
- Encouraging repeated borrowing
- Little regard for the borrower’s ability to repay
Secured Loan: Requires collateral (something valuable) to get the loan. If the borrower fails to repay, the lender can take the collateral.
Examples:
- Mortgage
- Auto loan
- Home equity loan
Unsecured Loan: Does not involve collateral. The lender provides the loan based on the borrower’s credit score and financial history.
Examples:
- Personal loan
- Credit card