Predatory Lending

>> I looked into one of those secured cards but was smart enough to read all the terms and realize what a bad deal it was. <<

Predatory lending is a channel trap: a lot of factors arranged to force the prey into the hunter's ambush. It relies on such things as: minimum wage does not provide enough money to live on, poor people cannot obtain loans at reasonable rates from responsible lenders, and if you can't pay for what you need then you usually go without. Payday loans are often for things like fixing a car (no way to get to work without it), medical bills (anything to stop the pain), or rent (without an address you're a nonperson). Predatory credit cards for "credit repair" rely on the above factors plus the fact that bad credit, whether true or false, prohibits people from doing many necessary things such as obtaining housing or transportation, and increasingly employers are credit-searching applicants so now it affects your ability to get a job at all. Rent-to-Own has a dual approach by offering both important functional items such as mattresses and appliances, but also moderate luxuries -- because when you're poor, you can get ground down by the unrelenting ugliness of a life with no pleasures in it (you can't afford a movie, eating at a restaurant, etc.). Typically people can resist the temptation to buy things for a while, but on some occasions their willpower will slip; and RTO is designed to look like a reasonable way to buy expensive items by breaking them into small payments.

All the predatory lending practices also rely on two other factors: 1) Poor people are less likely to be proficient readers, and 2) they are less likely to be proficient at math. This is because schools in poor areas are less effective at educating children, which perpetuates poverty; but also because being bad at reading (and to a lesser extent math) can limit your ability to get a decent job. So the contracts are attractive on the surface, with the dangers buried in obfuscating language; often the risk is not revealed until you do the math to determine the final cost. Remember how much it sucked setting up the actual equation for a story problem? Most math in real life consists of story problems, where you have to know not only how to solve the equation, but how to take numbers and processes out of a text description and assemble them into the correct equation so you can then solve it.

I believe that America's economy would be greatly improved by capping interest rates at a low level (such as 10-12%) and by mandating that nobody ever has to pay out more than double what they borrowed for any reason. (I think 100% interest is still usurious, but at least it would prevent borrowing $200 and paying back $2000.)

I try to make the world a better place. Of course, being a writer, I am interested in almost everything. Part of my purpose is the gathering, processing, and dispersal of information.

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