What is an example of coercion in the context of obtaining an auto loan?

Requiring insurance through a specific company can be considered an example of coercion when obtaining an auto loan. In this context, coercion refers to the practice of imposing undue pressure or influence to compel someone to act against their will or preferences. If a lender mandates that a borrower must secure insurance from a designated insurer as a condition for the loan, it could be seen as forcing the borrower into a specific arrangement that they may not agree with otherwise. This limits the borrower's ability to choose an insurance provider based on their circumstances, preferences, or financial considerations, thus demonstrating a form of coercion in the financial transaction.

The other options may not fit the definition of coercion as neatly. For instance, threatening to reduce a loan amount could be seen as a negotiating tactic rather than outright coercion, and refusing loan applications might be a standard business practice to filter applicants based on creditworthiness. Changing loan terms arbitrarily could indicate poor business practices rather than coercive behavior, as it speaks more to lack of stability and transparency rather than exerting influence over the borrower’s choice or consent.