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Low-Income Tax Blues: April Can Truly Be the Cruelest Month

Wednesday, April 12, 2017
Bobbi Murray | Capital and Main
Diane Standaert

Yet banks are very much involved in the lives of the unbankable. They securitize and sell payday loan and car title loan debt. Title loans take the borrower’s car as collateral—when the note comes due the borrower can either re-borrow, pay fees or lose the car. Combined, these two loan types drain over $8 billion a year from consumers, said Diane Standaert, executive vice president and director of state policy at the Center for Responsible Lending. The average costs hit a 300 percent annual percentage rate. “Both types of loans are structured to keep borrowers stuck in long-term debt. The trap is the business model.” The practices, she said, are concentrated in low-income neighborhoods and communities of color—very much like the predatory mortgage lending that led to the 2008 crash.