Mary Virginia Boutwell | 6/4/2008 1:44:10 AM
RUSTON – The red flags of predatory loans were explained to the public at a Dollar Defense workshop presented by the LSU AgCenter May 29.
Ginger Boutwell, LSU AgCenter Franklin Parish agent, explained that predatory lending is the practice of making loans to consumers who have little ability to repay the loan. The lenders exploit borrowers by charging extremely high interest rates and fees, she said.
Common examples of predatory lending practices include payday loans, car title loans, tax refund anticipation loans, check cashing stores and pawn shop loans.
Predatory lenders target desperate groups who need money immediately, can’t wait and can’t qualify for or distrust traditional bank loans, said Boutwell. These target groups include the elderly and young military personnel.
Predatory lenders often encourage borrowers to refinance an existing loan into a larger, longer-term loan, often with a high interest rate. This is called loan flipping.
Loan packing happens when borrowers’ high fees for credit insurance and other “benefits” are packed into the payment for the loan.
“You can’t borrow your way out of debt,” Boutwell said, explaining that predatory loans can trap you in a never-ending cycle of debt.
Alternatives to payday loans include joining a credit union, asking for an advance from your employer, getting a small loan from a local bank, asking friends or family for a loan, negotiating debt payment with your creditors and enrolling in a low-cost credit counseling program.
Make a budget and avoid unnecessary purchases, build some savings and find out if you have or can get overdraft protection, Boutwell added.
“Shop around for your bank. Don’t borrow if you have to pay fees up front, you don’t know the lender or you don’t get terms in writing,” she said.
Lisha Landry, consumer specialist with the Louisiana state attorney general’s office, addressed elder abuse and exploits, including telemarketer scams. “Twenty-five percent of telemarketer victims are over 60,” she said.
Scams include prizes and sweepstakes, magazine sales, work from home and dream vacations.
Names often are obtained from the phone directory, she said, adding that having “Sr.” listed with your name is a red flag, indicating your age.
“Beware of charities that tug at your heart, especially if the plea is for a current event,” Landry added.
She said the U.S. Secret Service has a special task force fighting Nigerian scams.
Landry said it is OK to be rude on the phone or when a solicitor is at the door.
Beverly Trahan of Entergy gave a presentation on making successful home repairs. She suggests getting three bids, verifying credentials, getting a written agreement, using a three-payment schedule, designating one check writer, procuring your own material and doing a final inspection where “you really put the eyeglasses on.”
Lincoln Parish Sheriff Mike Stone asked the attendees to be careful.
“What you learned here today, please pass it on,” he said. “If there are any questions or doubt about anything, please call us.”
Contact: Ginger Boutwell, 318-435-7551, or firstname.lastname@example.org
Writer: Mary Ann Van Osdell, (318) 741-7430, ext. 1104, email@example.com