What is the definition of predatory lending?

Predatory lending is defined as unfair and abusive loan terms imposed on borrowers. This practice often targets vulnerable individuals who may be in urgent need of financial assistance. Predatory lenders frequently charge exorbitant interest rates and impose hidden fees, making it difficult for borrowers to repay their loans. These loans are typically designed to trap the borrower in a cycle of debt, where they are forced to take on additional loans to pay back the original loan, leading to a financial crisis.

In contrast, the other options describe lending practices that promote fairness and transparency, which are not characteristic of predatory lending. Fair lending terms, government regulation, and straightforward agreements are fundamental principles that ensure borrowers are protected and treated ethically. Predatory lending undermines these principles by exploiting borrowers rather than providing them with equitable financial solutions.