Describe what predatory lending entails.

Predatory lending refers to a range of unethical lending practices that take advantage of borrowers, particularly those who are vulnerable or lacking in financial literacy. This type of lending often involves imposing unfair or abusive terms, such as exorbitant interest rates, hidden fees, or other deceptive practices that can trap borrowers in a cycle of debt.

The characteristics inherent in predatory lending include loans that do not reflect the borrower's ability to repay, as well as aggressive tactics to sell loans to unsuspecting individuals. This form of lending can lead to significant financial distress for borrowers, often resulting in serious consequences such as foreclosure, bankruptcy, or loss of assets.

Understanding predatory lending is crucial for consumers, as it highlights the importance of recognizing the terms and conditions of loans they may be considering, allowing them to make informed financial decisions and avoid the pitfalls of unscrupulous lenders.