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Consumer Knowledge and Understanding of Consumer Credit
Author(s) -
MANDELL LEWIS
Publication year - 1973
Publication title -
journal of consumer affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.582
H-Index - 62
eISSN - 1745-6606
pISSN - 0022-0078
DOI - 10.1111/j.1745-6606.1973.tb00518.x
Subject(s) - usury , rank (graph theory) , business , consumer protection , economics , actuarial science , marketing , commerce , islam , philosophy , theology , mathematics , combinatorics
Much has recently been written about the desirability of restrictive usury laws. While low maximum rates may prevent excessive charges to some, they also limit the ability of high‐risk persons to borrow. Therefore, if consumers have a sufficient understanding of the credit market to realize what they are paying for and how much they are paying when they borrow, a case can be made against low maximum finance rates. This article reports on a nationwide study designed to measure consumer knowledge and understanding of consumer credit. The results are that while consumers can generally rank lenders correctly in terms of cost, there are serious gaps in their knowledge of the credit market. Education and income are the key determinants of knowledge and understanding of consumer credit.