Question

Which of the following activities may indicate predatory lending?

(A) Targeting borrowers with poor credit history.
(B) Pressuring borrowers to sign loan documents without fully understanding them.
(C) Charging excessive interest rates and fees.
(D) All of the above.

Answer 1

Predatory lending may involve targeting borrowers with poor credit history, pressuring them to sign loan documents without understanding them, and charging excessive interest rates and fees.

Step-by-step explanation:

Predatory lending refers to unethical lending practices where lenders take advantage of vulnerable borrowers. In this case, all of the activities (A) targeting borrowers with poor credit history, (B) pressuring borrowers to sign loan documents without fully understanding them, and (C) charging excessive interest rates and fees can indicate predatory lending. For example, lenders may target borrowers with poor credit history because they are more likely to accept unfavorable loan terms. They may also pressure borrowers to sign loan documents without explaining the terms and conditions, leading to potential exploitation. Additionally, charging excessive interest rates and fees can be a sign of predatory lending as it burdens borrowers with unaffordable payments.