1. The State of Lending in America & Its
Impact on U.S. Households:
Cumulative Costs of Predatory Practices
Sarah D Wolff
sarah.wolff@responsiblelending.org
Below the Surface: Cumulative Costs of Abusive Lending
June 16, 2015

2. 1. Lending abuses are related not isolated
2. Costs typically measured are just the tip of the
iceberg
3. Lending abuses, across product, affect low
income borrowers and people of color in
particular.

3. Lending abuses are related, not isolated
Payday
Lending
Debt Settlement
Services
Subprime Mortgage
Lending
Car-title
Lending
Student
Lending

4. Lending abuses are related, not isolated
Most consumer are not simply mortgage holders, credit card
users, payday loan borrowers or car-title borrowers; they are likely
to participate in more than one of these markets, often at the
same time.

5. Just as a hammer can be used to build a house or
take it down, the terms and conditions under which
credit is extended determine its ultimate effect.

6. The steep costs of lending abuses
are just the tip of the iceberg
Excessive Fees and Interest
Debt Traps
Costs Resulting from Default
Opportunity Costs
Ongoing Wealth Disparities
Impact on Financial System
Macroeconomic Costs

8. Low Income Borrowers
Product Typical Income
Car-title loan Less than $25,000
Payday loan $30,000-$35,000
For-profit College
Enrollees
Less than $25,000
Yo-Yo Auto Loan
Scams
Less than $25,000
Sustained
Overdraft Use
Less than $50,000
Borrowers of Color
African-
American
Compared
to White
Latino
Compared
to White
High rate
subprime
mortgage
2.8 2.2
Payday loan 2.2 1.0
For-Profit
College
Enrollees
2.8 1.5
Auto loans
with dealer
mark-up
1.7 n/a
Some populations
disproportionately affected

9. Some places experience
repeated lending abuses

10. 1. Lending abuses are related not isolated
2. Costs typically measured are just the tip of the
iceberg
3. Lending abuses, across product, affect low
income borrowers and people of color in
particular.