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Personal Finance Courses: Predatory Lending

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1.
What is a typical fee on a payday loan?
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15%. Fee rates range from 15-20% of the amount borrowed.
2.
Although people who take out payday loans use them for many different purposes, what is the most common use?
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Regular living expenses. Most borrowers use payday loans for regular living expenses.
3.
Paying off payday loans on time, every time, is a great way to build up your credit score.
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False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.
4.
Predatory lending can be identified by _______.
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Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.
5.
If you are behind on a non-payday loan, why should you talk with the creditors about it?
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They would rather work with you than have to sell your loan to a debt collector. If they sell your loan to a debt collector, they will get very little for it. They WANT to work with you rather than see that happen.