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Spotting Red Flags

Red Flag
Red Flag Description

Pressured sales tactics

You’re pressured to purchase things or take out loans you don’t want or can’t afford

No consistency

Different staff or salespeople are telling you different things regarding pricing or other information

Won’t put it in writing

No one will give you clear information in writing, even when you ask for it

Unexplained fees

No one can explain what certain fees are for or what they pay for

No clear cancellation or return policy

There’s no clear cancellation or return policy – don’t assume you’re able to return a product or cancel a purchase

Inconsistent information on interest rates

The salesperson tells you about an interest rate, but the numbers on the form are much higher

Pushed to purchase

You are being pushed to make a big-ticket purchase immediately – if a salesperson says the offer won’t still apply if you take a day to think about it, be suspicious

Steering and coercing

Aggressive sales tactics are used to steer and coerce you toward a high cost loan, even though you could have qualified for a regular prime loan

Paperwork doesn’t match the sales pitch

The promises made to you by a salesperson aren’t in the papers or the online documents that you’re asked to sign

Confusing fine-print

A simple rule to follow is to refuse to sign anything that you don’t understand

Incomplete paperwork

Never sign a contract with blank spaces to be filled in later

Additional insurance and other add-on products

Some lenders may insist on or imply that borrowers must buy unnecessary items like additional insurance, unneeded warranties, monitoring services, etc. They get incorporated into the loan amount, and the borrower pays interest on them over the life of the loan

Prepayment penalties

Prepayment penalties are fees lenders require a borrower to pay if the borrower pays off a loan early

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