Abusing the loan practice
Just like in case of any other form of regular activity involving certain rules, norms or policies; even in case of giving and taking loans, certain malpractices often take place which in a way bypass the basic idea of the system of loan and in turn exploits the various loopholes in order to satisfy the vested interests. Such practices are more common with individual lenders rather than to be associated with financial organizations and the most common phrase that is generally used to describe these kinds of malpractices is known as predatory lending.
Although, this particular term has also been used in certain cases where major financial organizations like banks, etc are involved like in certain credit cards, overdraft loans and payday loans and other similar forms mainly due to the reason of excessively high rates of interest, predatory lending as a term is essentially used under circumstances where there is a deceived borrower party involved who is persuaded in to taking a loan or signing an agreement with certain terms which are both unfair as well as offensive or in situations which breach the provisions in a systematic manner and thus putting the borrower party in a difficult position. It is a more common or widespread practice under secured loans such as cases where either a car or a house has been mortgaged against the sum of money being borrowed, so that failing to repay the amount according to the terms and conditions of the agreement or the bond, the ownership of the particular property will shift to the lender party. It has been found out that most of the cases of predatory lending happen with the illiterate section of the mass who are easily deceived into such scheme of things, although there has been quite a few instance from the higher strata of the society as well.