Learn More: High Cost Lenders
Metadata
Variable Definitions:
High Cost Lenders: The number of high cost lenders, including payday lenders and vehicle title lenders, in a given area
Source:
California Department of Business Oversight (provided by the Los Angeles County Department of Consumer & Business Affairs Center for Financial Empowerment)
Years Available:
2019
Geographic Unit:
Census tracts (aggregated neighborhoods and cities)
Why is This Variable Important to Measure?
High Cost Lenders
In this dataset, high cost lenders include payday lenders and vehicle title lenders. Also known as predatory lenders, high cost lenders market their
loan products to consumers who need quick cash but may not qualify for
loans at traditional financial institutions because of their credit history or
income. However, high cost loans can be dangerous as they carry an average
annual percentage rate (APR) of 391% as compared to about 10% for banks and
credit unions. These extremely high interest rates, often accompanied by
additional fees, mean that loan recipients who cannot pay back their loans on
time quickly accrue debt that can become insurmountable and financially
devastating. Especially in low-income communities that lack access to banks and credit unions, consumers often turn to high cost lenders for help paying bills.
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Sources:
Center for Responsible Lending. "The Debt
Trap of Triple-Digit Interest Rate Loans: Payday, Car-Title, and High-Cost
Installment Loans." March 2019. Link