Post #4094912
2026-07-25 10:44 UTC
In other words: because poor people have a higher likelihood of defaulting, their loans come with higher interest rates and worse terms. Debt is steeply regressive: the less money you have, the more you're expected to pay. The industry term for this is the "risk premium": the riskier a loan is, the more it costs the borrower.
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Replies (1)
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@pluralistic@mamot.fr 2026-07-25 10:45
Lenders are always seeking the highest possible return on their loan-books, which makes that "risk premium" awfully tempting. Why loan $1m to Elon Musk at 0.5% interest when you can make 10,000 $100 payday loans to non-union Tesla workers on food stamps at 1,000% interest? 3/