In the strictest and legal sense, predatory lending refers to secured loans such as home or car loans which are made by the lender with the intention that the borrower will not repay the loan, allowing the lender to seize the car or home and sell it for a profit. Colloquially, the term has been expanded to refer to the practice of convincing borrowers to agree to unfair and abusive loan terms. Such loans could take place either through outright deception or through aggressive sales tactics, taking advantage of borrowers’ lack of understanding of extremely complicated transactions. For instance, predatory loans for the purchase of a home could lead to foreclosure. Opponents of predatory lending often include transactions such as tax refund anticipation loans (or RALs), pay day loans, and credit cards, along with mortgage lending, in the term. The terminology is thus loaded, where proponents and opponents often intentionally blur the line between the two definitions in order to make their case sound better.
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