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Predatory lending is a big business. Everyday in Memphis and Shelby County, citizens lose wealth by depleting their equity and earnings in transactions with predatory lenders. These lenders can include check cashing outlets, pawnshops, payday lenders, car title lenders, mortgage brokers, and contractors.


There is no legal definition of a "predatory" loan in Memphis, but the Memphis DEBT Collaborative defines a predatory loan as one that "intentionally uses misleading features and marketing tactics to create a debt that results in a negative impact on the consumer, neighborhood and the community." This means that the consumer is worse off financially after taking the loan. This is because consumers are not always made aware of all of the terms and fees associated with their loans, and there have been situations where consumers were not aware that they even had loans. Consumers are also taken advantage of during vulnerable times and therefore may not make the decision that is in their best interest.


Predatory loans usually contain hidden fees, balloon payments, high interest rates, and/or financed credit life insurance. Predatory loans associated with home improvements often involve substandard work or the work is never completed, but the money is still owed. Many victims of predatory lending are unaware of the type of loan they are obtaining.

In almost every neighborhood in Memphis and Shelby County, there are guerilla advertisements for predatory lending, billboards, flyers, signs, and radio and television advertisements. For some citizens, a predatory loan may be the only means of accessing any credit. Unknowingly, they take out emergency pay check loans with 500% effective interest rates, predatory mortgage loans with interest rates of 20% or pay 10% of their paychecks to have it cashed.

What to do if you think you are a victim

Visit or call the local Don't Borrow Trouble hotline at (901) 432-4621.

What to do if you want to be an advocate

MemphisDEBT Collaborative is actively working on lowering the incidence of predatory loans in our area and supporting legislation that will make it more difficult for predatory lenders to successfully market their products. If you would like to become involved in helping collaborative members determine solutions, call 901-507-6638.

The information on this website should not be a substitute for the advice of a professional.

• Compare interest rates. Predatory lenders rely on the fact that you won't do your research before signing a contract.

• Contact the Better Business Bureau before loaning money, to make sure the company you're doing business with is reputable. Click here to visit the Midsouth Better Business Bureau website.

• Be wary of making quick decisions. Repairs to a car or a home can cause such anxiety that consumers often go with the first offer without considering the financial effects.

• Predatory Lending in the News: Memphis Needs Relief From Epidemic of Predatory Lending from The Commercial Appeal

MemphisDEBT • 22 North Front Street, Suite 680 • Memphis, TN 38103 • Phone: 901-507-6638 • Fax: 901-507-6640