What does the term 'predatory lending' commonly refer to?

The term 'predatory lending' commonly refers to unethical loan practices targeting vulnerable consumers. This form of lending is characterized by practices that deceive, exploit, or coerce borrowers, often resulting in terms that are unfair or oppressive. Predatory lenders may take advantage of individuals who are less financially knowledgeable or who may be in desperate situations, leading them into loans with excessively high fees, interest rates, or terms that are difficult to understand.

This definition highlights the predatory nature of these practices, which are fundamentally exploitative and harmful to borrowers, undermining the principles of responsible lending that are emphasized in federal laws. The other options do not capture the essence of predatory lending; they either refer to positive lending practices or do not relate to the unethical nature of the transactions involved.