There are many things that can be added into a lending agreement that can really end up hurting you in the long run. Some of these are illegal, while others are just sneaky and shady. You’ll want to choose a reputable lender, such as August Funding, to ensure that you aren’t getting ripped off. Regardless who you choose, here are 7 things you want to watch out for when getting ready to sign a lending agreement.

1. Outrageous Repayment Times

The first thing you want to look out for are outrageous repayment periods. Depending on what kind of lending agreement you have, most will have you paying it back in 30 years at the absolute maximum. It really shouldn’t go any longer than that. If it does, you should try and see if you can negotiate to a shorter amount or go with a whole different company. The main reason some companies do this is to get more fees out of you. If it goes on for more than 30 years, you’ll end up paying way more than you should’ve with the original loan.

2. Pyramiding Late Fees

While late fees are completely legal, pyramiding late fees are not. Pyramiding late fees is when the lender puts your normal payment towards your late fee, then the rest towards your normal payment. By doing it this way, you never really catch up and you’re going to always be behind. They do it this way because they get extra money from you. Keep in mind, this type of practice won’t usually be written out in the agreement, so make sure you watch in the months following any late payments. If you’re paying on time but still being charged late fees, contact your lender immediately.

3. Waivers of Exemptions

In the event you default on your loan and the creditor sues you, there are some things that can’t be taken. These are called exempt property. Waiver of exemptions means that you’re waiving your rights to keep these things and they can be taken to pay the amount you owe. The lending agreement will have this right in the paperwork, so you want to make sure you read thoroughly. If you see that they want you to sign a waiver of exemptions, you should just walk away or try and get them to take it out.

4. Balloon Payments

You will also likely want to try and avoid balloon payments. Loans with balloon payments may often appear appealing, but the much larger final payment can cause issues for those who either don’t plan ahead or experience a downturn unexpectedly. If this final payment is missed, the lender can often reposes whatever was the subject of the initial loan despite all other payments being made on time.

5. Prepayment Penalties

Something else you should watch for are prepayment penalties. Since lenders make money on the interest they charge you, they want to keep you paying as long as they can. If you pay your entire amount early, they won’t be making money off interest anymore. To help ensure they still get their money, lenders sometimes charge a prepayment fee. This fee can actually be quite large and you might not be able to pay it if you don’t know what to expect.

6. Confession of Judgement

The final thing you want to look out for is a confession of judgement. If you sign this, you’re giving away your right to be taken to court and fight. These let the creditor sue you without ever stepping foot into a courtroom. The good thing is that these aren’t allowed in contracts for consumers and not many lenders include it. There are some, though, that will try everything to protect themselves. If you see this, you have a few choices. You can either try and re-negotiate with the lender or you can stop the process and go with someone else.

While these are some of the biggest things to avoid, there could be all kinds of other things that need avoided too. The best thing is to just not sign the agreement if you feel like it isn’t a good idea. If you get a bad feeling about anything, it’s better to just call it off than to continue and get ripped off! Just remember to read all the documents thoroughly and ask questions about anything you aren’t sure about. The two things that can help are going to a trusted lender, like August Funding, or having your lawyer go over the papers before signing.