Payday loans, title loans, and other predatory lenders take advantage of people in poverty through high-interest loans and debt traps. A high percentage of people experiencing poverty in the U.S. have accumulated some amount of debt, and either due to lack of financial literacy or a lack of financial options, some agree to loans with interest of over 400%. Interest on these loans creates a long-term problem out of what seems to be a short-term fix; often people take out these types of loans for quick cash to pay for groceries, medical expenses, and other basic needs. This type of financial exploitation is difficult to regulate and target poor communities, making the issue one of justice and inequality. Predatory Lending is a major cause of the “stickiness” of poverty and must be understood in order to effectively understand and address the financial realities of poverty.
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