Predatory Lending

Spot Predatory Lending and Use Smart Alternatives

It is the first of the month, your bank account is nearly empty, and rent is due. Desperate, you turn to a payday lender for a quick loan until payday. But then your car breaks down, and suddenly you are borrowing again, digging deeper into debt. This scenario plays out for millions of Americans every year. The good news? You can avoid turning a tough situation into a financial disaster. 

How to recognize predatory financial services, understand how they operate and choose better solutions


Payday loans are a predatory pitfall

Payday loans, for example, are promoted as quick fixes, no credit checks, instant cash, but the reality is far harsher. With annual percentage rates (APRs) ranging from 300 to 800%, these short-term loans can quickly spiral out of control. According to the Consumer Financial Protection Bureau, over 80% of payday loans are reborrowed within a month, and one in four borrowers reborrow 9 or more times. Borrowers often end up paying more in fees than they initially borrowed.

Predatory lenders promise quick relief but keep borrowers trapped in cycles of debt

Payday lenders profit when customers are unable to repay their loans. They target people who may not have access to traditional financial institutions and often lure them in with additional services, such as check cashing, for hefty fees. Cashing a $1,000 paycheck could cost $50 or more each time, adding up to over $1,300 a year. By contrast, credit unions typically let members cash checks for free and offer the convenience of direct deposit.

Pawn shops are another predatory risk

Pawn shops offer quick loans against personal items like jewelry or electronics, but with high interest and short repayment windows, usually 30 to 90 days. If you cannot repay on time, they will either extend the loan for extra fees or sell your valuables. In a 2019 survey, 73% of pawn borrowers still owed money six months later.

Car title loans can leave you stranded

Car title loans are similar because they use your car as collateral. Title loan lenders rarely verify income or credit; they do not need to, because if you default, they take your car. Many own dealerships, meaning they profit from both your payments and the resale of your vehicle.

Rent-to-own stores may seem harmless but can be just as predatory

Paying $30 a week for a couch might sound affordable, until you realize that the same $600 couch could cost you $2,000 by the end of the contract. With effective APRs ranging from 43 to 468%, rent-to-own agreements charge far more than a traditional purchase or even a credit card.

Even housing can fall into the predatory trap

“Rent-to-own” or contract mortgages often target people who cannot qualify for traditional loans. These deals typically include high interest rates, balloon payments and strict terms. Miss a payment or break a rule, and you lose both the home and every dollar you have invested.



If you need emergency cash, a personal loan from a credit union is a far safer choice. You will get better rates, longer repayment periods and transparent terms. Credit unions, like Ascentra, even offer loans, such as “CashNOW” of up to $2,000 without a credit check. These loans are reported to credit bureaus, helping you build credit as you repay.

A credit union offers fair loans, financial coaching and long-term solutions to help you build stability and wealth. When money is tight, it is tempting to use the first lifeline offered, but not all lifelines lead to safety. Many are anchors that pull you deeper into debt. With the right financial partner and a solid plan, you can stay afloat, regain control and steer toward the financial future you deserve.



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Replacing Non-Renewable Scholarships

  • Jan 22, 2025

 

Many college students will face a financial reality within the next few months: Scholarships and grants that made the current year affordable will soon come to an end. Some awards are only intended to be applied to the first year of college; others carry renewal requirements, such as a minimum GPA or a specific major, that go unmet.

If fewer scholarship and grant funds are available to you or your student next year, start planning now to make up for the shortfall. Here are some ways you may replace non-renewable scholarships or funds provided by scholarships.

Find new scholarships. Although many scholarships are available to freshmen, you may be able to find scholarships for upperclassmen with a little effort.

If you have settled on a major, start with your academic department or college. Search the department website, visit the departmental office and talk to your academic adviser.  Stop in the campus financial aid office and see what scholarships are offered to students who have your academic and extracurricular interests. Check with professional and pre-professional organizations about scholarship programs to help students in your intended career field.

Look for local and small scholarships like Ascentra’s Scholarship Program. A lot of students tend to compete for national and large scholarships. You may have better luck standing out among applicants for smaller and local awards.

Consider adding work hours. During the school year, you may be able to find positions on or near campus that allow you to prepare for your intended career while earning money. Look for jobs as a teaching assistant, tutor or research assistant. Resident Assistants in the dorms may qualify for reduced room and board costs, while other campus positions may allow you to study during slow times.

There are many opportunities for students to subsidize non-renewable scholarships.  Although it may be difficult to learn about them, it’s worth while putting in the time, research and effort to lower the cost of education.  We suggest turning your scholarship hunt into a part-time job.  Just by committing as little as five hours a week to finding and applying for scholarships can have a big impact on the amount you owe at graduation. 

Ascentra is excited to offer scholarships for high school graduates, undergraduates, trade and vocational students. Fifteen $1,000 scholarships are available each year, and they are renewable for eligible students to re-apply for each year. To learn more about the Ascentra Scholarship Program, click here.

 


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Replacing Non-Renewable Scholarships

  • Jan 22, 2025

 

Many college students will face a financial reality within the next few months: Scholarships and grants that made the current year affordable will soon come to an end. Some awards are only intended to be applied to the first year of college; others carry renewal requirements, such as a minimum GPA or a specific major, that go unmet.

If fewer scholarship and grant funds are available to you or your student next year, start planning now to make up for the shortfall. Here are some ways you may replace non-renewable scholarships or funds provided by scholarships.

Find new scholarships. Although many scholarships are available to freshmen, you may be able to find scholarships for upperclassmen with a little effort.

If you have settled on a major, start with your academic department or college. Search the department website, visit the departmental office and talk to your academic adviser.  Stop in the campus financial aid office and see what scholarships are offered to students who have your academic and extracurricular interests. Check with professional and pre-professional organizations about scholarship programs to help students in your intended career field.

Look for local and small scholarships like Ascentra’s Scholarship Program. A lot of students tend to compete for national and large scholarships. You may have better luck standing out among applicants for smaller and local awards.

Consider adding work hours. During the school year, you may be able to find positions on or near campus that allow you to prepare for your intended career while earning money. Look for jobs as a teaching assistant, tutor or research assistant. Resident Assistants in the dorms may qualify for reduced room and board costs, while other campus positions may allow you to study during slow times.

There are many opportunities for students to subsidize non-renewable scholarships.  Although it may be difficult to learn about them, it’s worth while putting in the time, research and effort to lower the cost of education.  We suggest turning your scholarship hunt into a part-time job.  Just by committing as little as five hours a week to finding and applying for scholarships can have a big impact on the amount you owe at graduation. 

Ascentra is excited to offer scholarships for high school graduates, undergraduates, trade and vocational students. Fifteen $1,000 scholarships are available each year, and they are renewable for eligible students to re-apply for each year. To learn more about the Ascentra Scholarship Program, click here.