What is the definition of "predatory lending"?

The definition of "predatory lending" refers to practices that impose unfair or abusive loan terms on borrowers. This concept encompasses a variety of exploitative tactics used by lenders to take advantage of borrowers, often targeting those who are vulnerable and may not fully understand the financial products being offered to them. Predatory lending can involve excessively high-interest rates, hidden fees, and other deceptive practices that can lead borrowers into a cycle of debt they cannot escape.

In this context, the other choices focus on positive or corrective measures related to lending practices, such as ensuring fair interest rates or protecting borrowers from excessive debt. However, these do not accurately describe predatory lending, which fundamentally centers around exploitative and harmful lending behaviors rather than fair or ethical practices. A clear understanding of what defines predatory lending is crucial for both borrowers and professionals in the lending field to ensure responsible lending practices are upheld and to protect consumers from such harmful tactics.