Which of the following best defines predatory lending?

Predatory lending is best defined as unethical practices that target borrowers and impose unfair terms and fees on loans. This definition captures the essence of predatory lending, which typically involves exploiting vulnerable borrowers through deceptive, coercive, or unjust loan agreements. Predatory lenders often engage in practices such as charging exorbitant interest rates, hidden fees, and other unfavorable conditions that can trap borrowers in a cycle of debt.

This type of lending preys on individuals who may have limited financial literacy or access to more favorable loan options, making it a significant concern in the lending industry. Unlike standard loan practices, which are meant to be fair and transparent, predatory lending undermines the borrower's financial stability and can lead to severe economic consequences. Recognizing the signs of predatory lending is crucial for borrowers to protect themselves from entering into harmful financial agreements.