3 Types of Predatory Debt You Need to Know About

3 Types of Predatory Debt You Need to Know About

The type of debt you get matters, and many don’t understand that. Here are 3 types of predatory debt effecting millennial’s and gen x’ers debt snowball. Predatory loans is where the most confusion comes in, and later the pain and sorrow is packed on for years afterwards. So, in case you wonder how debt snowballs, it starts when you don’t understand the predatory nature of some debt, that can last for decades.

There are many different types of loans, but I am only discussing those that destroy lives without understanding them.


A predatory loan is usually difficult to understand, not well-explained, is high interest, and can snowball quickly and easily.


Used Car Loans – many have terms that have unbelievable interest rates. But many I have spoken to who were caught in this web, did not understand the high interest or bad terms in the loan.

Payday Loans – many users are encouraged to roll over their loan weekly because they don’t have the money to pay the loan. After a year of doing this your interest can morph to over 300%. Car title loans have a similar problem, many lose their cars according to a PBS special which showed a sea of cars taken from the car owners.

Unsubsidized Student Loans – I have had several college graduates contact me about this issue and none of them knew what their unsubsidized loan was until after they graduated.

Upon graduation they got he shock of their lives, with a loan balance far above what they borrowed and were confused. I explained to each one that they have an unsubsidized loan (as opposed to a subsidized loan, where interest is subsidized by the government while in school).

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With an unsubsidized loan where the interest is charged to the student, while in school. Most don’t understand or have money to pay the interest while in school, so it accumulates.

The loans I have seen have doubled or more from the original balance and the interest is added to the balance after graduation, so now they have a huge balance of double or more from what they borrowed, immediately after graduation.

This is one reason some students are skipping college to choose to work their way up on a job or go to a college they can pay from work and parents. Some student loans are taking 25 years to pay off.

The more you understand about predatory debt the easier it will be to avoid it with all the lifetime horrible consequences.

Lois Center-Shabazz | Course Delta Agency
Personal Finance: Author, Blogger, Course Creator, Money Strategist

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About MsFinancialSavvy

Lois Center-Shabazz is an award-winning author and winner of the Pinnacle Book Achievement award for personal finance. She is a Personal Finance Blogger, Course Creator and Money Strategist, who is also a successful Mutual Fund Investor. Click "Let's Chat" in the top toolbar and schedule a meeting with Lois to discover your top level personal finance abilities.

15 comments on “3 Types of Predatory Debt You Need to Know About

  1. I try to do my best not to use loans. It will not always succeed, but you must avoid them or use them wisely. Thanks for the post.

  2. These are great tips. The hardest loan I ever repaid was student loans for my undergraduate degree. I’m pretty sure it took over ten years. For my graduate degree, I did things differently and will graduate soon with absolutely no debt.

  3. Very informative post. I am currently in debt with used car loan but so far I have manage to be a good payer. I am almost near the end term. So glad about it! Thanks for sharing ♥️ ♥️ By any chance you are interested on doing collaborations, you can check out the collaborations portal of Phlanx.com and connect with amazing brands!


  4. Great explanations and great advice. Student debt is crazy… I hustled all throughout University LIKE hustled and paid my tuition throughout my four years of university. I never wanted to have that debt looming over me. I was also living at home and had support from my family ( food, RESP) but I know I had to put off getting my Masters because I needed to start a life and make money and save… I know I can’t hustle to the same degree whilst going for my Masters. But here’s my current dilemma, I am so used to my salary job and going back to school would be a big financial hot even with the savings I’ve accumulated these past 3 years. I know in my heart I have to do it but the idea of having this burden to pay off freaks me out.

    • The first thing you should ask yourself is: Do I really NEED a masters degree to succeed in my field or job? I know many who have done phenomenal without it.
      Does my job do tuition reimbursement? Many jobs do. Find one that does. I have friends who have gotten masters degrees free with their jobs tuition reimbursement.
      Do I understand unsubsidized loans? The interest must be paid while in college or your balance will more than double after graduation with huge payments. Some people I talk to have payments larger than their take home pay.
      They have to get a second job just to pay rent and food.

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