Predatory Lending
If I had a nickel for every time I heard someone use the phrase "predatory lending", I'd have enough money to make a down payment on a house I couldn't afford. Then when I ended up facing foreclosure, I could whine and ask the government for a handout to solve the problems that I created for myself.
The expression "predatory lending" doesn't even make any sense, except when I use it to describe the twenty dollars that I loaned to Cuddles, my pet velociraptor (and even then it isn't quite correct). How can there be any predatory element of a loan? The terms of a loan are given in a contract that the borrower agrees to. Voluntarily. The rules are pretty simple:
1) If you don't understand the contract, don't sign it. Hire a lawyer to explain it to you if necessary.
2) Don't agree to a mortgage you obviously can't afford.* If the primary responsibilities of your job include operating a deep fryer, you probably can't afford a house that costs $350,000. Number crunching should not be required to figure that out; a little common sense should be enough.
3) Follow the advice of a real estate agent at your own peril. Real estate agents typically receive a percentage of the sale price of each home they sell as a commission.
I remember back when I used to work packing boxes in a warehouse, one of my fellow employees told me a story about his visit to a car dealership. He was approached by a car salesman who eventually started trying to explain to him that he could afford the payments on this one particular Mercedes. His response was "No. I can't afford that car. I work in a warehouse". This simple conclusion, which he arrived at with the help of neither a college degree nor a calculator, suggests that he has a basic common sense which even some college graduates seem to lack.
Of course you always have the option of living in a fantasy world, buying things you clearly cannot afford, and (after reality finally forces its way back into your deluded little mind with the help of credit card bills and a foreclosure notice) trying to convince everyone that you're a victim of the cruel, evil people who agreed to sell you all these expensive things. But is it really worth it?
Finally, while I'm on the topic of poor financial decisions: Never lend your money to a velociraptor. Cuddles refuses to pay me back no matter how much I plead with him, and threatening him just doesn't seem like a very good idea. I'm actually not an expert on extinct species or anything, but "don't piss off a velociraptor" just seems like common sense.
*If it were not for two infamous government-backed corporations that can essentially privatize their gains and socialize their losses, it's quite possible that nobody would have taken the risk of offering you the "iffy" mortgage agreement in the first place. However, I don't think that even matters; just because someone is willing to loan you money doesn't mean that taking the loan is a wise financial decision.
The expression "predatory lending" doesn't even make any sense, except when I use it to describe the twenty dollars that I loaned to Cuddles, my pet velociraptor (and even then it isn't quite correct). How can there be any predatory element of a loan? The terms of a loan are given in a contract that the borrower agrees to. Voluntarily. The rules are pretty simple:
1) If you don't understand the contract, don't sign it. Hire a lawyer to explain it to you if necessary.
2) Don't agree to a mortgage you obviously can't afford.* If the primary responsibilities of your job include operating a deep fryer, you probably can't afford a house that costs $350,000. Number crunching should not be required to figure that out; a little common sense should be enough.
3) Follow the advice of a real estate agent at your own peril. Real estate agents typically receive a percentage of the sale price of each home they sell as a commission.
I remember back when I used to work packing boxes in a warehouse, one of my fellow employees told me a story about his visit to a car dealership. He was approached by a car salesman who eventually started trying to explain to him that he could afford the payments on this one particular Mercedes. His response was "No. I can't afford that car. I work in a warehouse". This simple conclusion, which he arrived at with the help of neither a college degree nor a calculator, suggests that he has a basic common sense which even some college graduates seem to lack.
Of course you always have the option of living in a fantasy world, buying things you clearly cannot afford, and (after reality finally forces its way back into your deluded little mind with the help of credit card bills and a foreclosure notice) trying to convince everyone that you're a victim of the cruel, evil people who agreed to sell you all these expensive things. But is it really worth it?
Finally, while I'm on the topic of poor financial decisions: Never lend your money to a velociraptor. Cuddles refuses to pay me back no matter how much I plead with him, and threatening him just doesn't seem like a very good idea. I'm actually not an expert on extinct species or anything, but "don't piss off a velociraptor" just seems like common sense.
*If it were not for two infamous government-backed corporations that can essentially privatize their gains and socialize their losses, it's quite possible that nobody would have taken the risk of offering you the "iffy" mortgage agreement in the first place. However, I don't think that even matters; just because someone is willing to loan you money doesn't mean that taking the loan is a wise financial decision.
posted by jester at 2:49 PM
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