What is “predatory lending” according to New Jersey regulations?

Predatory lending is defined in New Jersey regulations as lending practices that impose unfair or abusive loan terms on borrowers. This definition highlights the exploitative nature of such practices, where lenders take advantage of borrowers, often by offering loans with excessively high-interest rates, hidden fees, or terms that are difficult for the borrower to meet.

This definition is crucial as it serves to protect consumers from harmful lending practices that can lead to a cycle of debt and financial instability. Understanding predatory lending helps borrowers recognize harmful practices and seek out fair lending options, ultimately promoting a healthier lending environment in the state.

The other choices do not accurately represent predatory lending. Although options like loan terms that benefit both parties or government-supported loan products may sound appealing or beneficial, they do not capture the abusive and exploitative essence of predatory lending practices. Additionally, while high-risk loans may be offered to certain groups, such as veterans, the focus of predatory lending is not restricted to specific demographics but rather highlights the unfair terms that can affect any borrower.