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The term predatory cash advance refers to a variety of abusive lending practices. Predatory lenders use high-pressure sales tactics. They only offer you high interest cash advances with lots of junk fees tacked on, even though you may qualify for a better cash advance. High interest rates and unnecessary fees raise the amount you must borrow, and make it hard for you to make your monthly payments. This puts you at risk of losing your house and the cash you have paid into it.

You won’t know if a lender is legitimate or predatory until you shop around and get quotes from several lenders. If you are purcashing a house, or simply refinancing your current cash advance, it’s essential to compare different cash advances and the cost of each. Even if you have great credit, you can fall victim to predatory lenders. Protect yourself by shopping for cash advances at different banks, credit unions and other lenders.

Predatory lending tactics

Predatory lenders:

Don’t tell you about lower rate cash advances you may qualify for.

Add unnecessary fees, commonly called “junk fees” to pad their profit.

Encourage you to repeatedly refinance. This allows them to collect more cash advance fees from you.

How to get a great house cash advance

Predatory lenders prey on individuals who don’t know how great a cash advance they qualify for. You can protect yourself by doing the following:

Get a copy of your free credit report and FICO score. The higher your FICO score, the better the cash advance you can get. You can use this calculator to find out the interest rate you qualify for. If your FICO score is low, you can learn how to improve your score.

Shop for a cash advance like you would any other major purchase. You won’t know how great a cash advance you can get until you have several quotes. Contact three or more lenders and compare the interest rate, points and fees.

Compare the quotes you’ve gotten from different lenders. Look at the cash advance terms and fees. It should be easy to tell which ones are “predatory.” Choose the best cash advance with the lowest interest rate and fees.

Sub-prime cash advances

If you don’t have great credit, lenders think about you a high-risk borrower. The higher the risk you are, the higher the interest rate you will be asked to pay. They are not going to offer you the best cash advances with the lowest rates. However, you may qualify for a sub-prime cash advance. A sub-prime cash advance has a higher interest rate and fees than prime cash advances that are offered to houseowners with a great credit rating. You should think of high interest sub-prime cash advances as being short-term. When your credit rating improves, you can and should apply for a better cash advance.

Recognizing sub-prime cash advances

Sub-prime cash advances have:

High interest rates and fees.

Monthly payments that may only cover the interest and do not reduce the principal balance.

Balloon payments that have a large payment due in one lump sum at the end of the cash advance.

Adjustable interest rates that can increase the amount of your monthly payment.

Prepayment penalties if you pay off the cash advance early, even if it’s to refinance the cash advance for better terms.

Negotiate cash advance costs and fees

Most banks, credit unions, and cash advance brokers charge points and fees to get you a cash advance. There are no set fees and charges. cash advance charges are negotiable and will vary from lender to lender. You should negotiate the amount of these charges as you would any other major purchase.

Before you sign

Everything you were promised should be in writing on the cash advance documents. If you do not understand something, do not sign. Ask for an explanation. Review the cash advance documents carefully.

The Truth in Lending Disclosure has the basic terms and conditions of the cash advance. Make sure it lists the interest rate and monthly payments you were promised.

The Settlement or Closing Statement shows the fees you are being charged for the cash advance. You can question the fees and ask that they be reduced or removed.