What is Predatory Lending?

Receiving a medical diagnosis can be a difficult and stressful experience. Along with the physical and emotional challenges of managing an illness, there are often significant financial costs associated with medical care. This is known as financial toxicity, and it can be a significant burden on patients and their families.

When you’re dealing with a medical issue, the last thing you want to worry about is how to pay for your care. Unfortunately, some lenders take advantage of people in vulnerable situations like this by using predatory lending practices. In this blog, we’ll explain what predatory lending is and how it can impact your health and finances.

What is Predatory Lending?

Predatory lending refers to the practice of lenders using deceptive or exploitative tactics to trap borrowers into high-interest loans that they cannot afford. Predatory lenders target vulnerable populations, such as low-income individuals, people with bad credit, and those needing unavoidable medical care.

Examples of predatory lending practices include:

• Offering loans with extremely high-interest rates
• Failing to disclose the full terms of the loan
• Pressuring borrowers to take out more significant loans than they need
• Offering loans with unrealistic repayment terms

The Impact of Predatory Lending

Financial toxicity is the term used to describe the economic burden that can result from medical treatment. It refers to the stress and strain that patients may experience as they struggle to pay for medical care, medications, and other related expenses.

The cost of healthcare has risen steadily in recent years, and many patients find themselves struggling to cover the costs of treatment. For those who fall into a predatory lending service, the burden can be even greater. Even with insurance, the out-of-pocket costs associated with medical care can be significant, particularly for those who require ongoing treatment or have chronic conditions.

Predatory lending can have severe consequences for both your health and your finances. For example, if you take out a high-interest loan to cover medical expenses, you may struggle to keep up with payments and fall into a cycle of debt. This financial stress can cause anxiety, depression, and other mental health issues, which can also impact your physical health and recovery.

Furthermore, if you delay seeking medical care because of the cost, your health problem may become more serious and expensive to treat in the long run. This delay can lead to larger medical expensive that take longer to treat, which increases your financial stress.

How to Avoid Becoming a Victim

There are several things you can do to protect yourself from predatory lending practices.

• Shop around: Don’t take the first loan offer you receive. Shop around and compare rates and terms from multiple lenders to find the best deal.
• Read the fine print: Before signing any loan agreement, make sure you understand the terms and conditions, including the interest rate, fees, and repayment schedule.
• Consider other options: If you’re struggling to pay for medical expenses, consider other options like setting up a payment plan with your healthcare provider, applying for financial assistance programs, or seeking out nonprofit financial counseling services.
• Report predatory lenders: If you believe you’ve been a victim of predatory lending practices, report the lender to the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general’s office.

Why You Should Consider Alternative Options

Predatory lending practices can have significant consequences for your health and finances. By shopping around, reading the fine print, considering other options, and reporting predatory lenders, you can protect yourself from falling into a cycle of debt.

CarePayment is a patient-friendly financing option that can help you receive the care you need without worrying about finances. With easy enrollment, zero interest (0.00% APR), and multiple payment method options, CarePayment is your provider’s solution to addressing your financial concerns regarding accessing affordable healthcare.

CarePayment Accounts are issued by Republic Bank & Trust Company, Member FDIC-insured, Kentucky state-chartered bank.