CUCE Consumer Lending Exam 2025 – Complete Test Prep

The definition of "predatory lending practice" specifically refers to lending practices that impose unfair or abusive loan terms on a borrower. This includes tactics such as misleading borrowers, imposing excessively high interest rates, charging hidden fees, or providing loans that the borrower cannot realistically repay. Predatory lending often targets vulnerable populations who may have fewer options or less financial literacy, making them more susceptible to exploitation.

This concept emphasizes the unethical nature of such practices, where the lender prioritizes profit over the well-being of the borrower. By focusing on unfair or abusive terms, this definition captures the essence of predatory lending, making it a serious concern in consumer lending regulation aimed at protecting borrowers from exploitation.

The other options, while they might relate to different aspects of lending, do not accurately capture the definition of predatory lending. For instance, extremely low interest rates could be beneficial, and extensive documentation is a typical requirement rather than an indicator of predatory behavior. High-cost loans may not necessarily involve predatory practices if they are transparent and fair, making the focus on unfair treatment the distinguishing factor here.