Test your knowledge

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Keep studying!

Review your answers below to learn more.

To qualify for a payday loan, what must your income be?

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$100 per week

$300 per week

There is no minimum.

There is no minimum. You just need to earn sufficient money to cover the loan.

What is a typical fee on a payday loan?

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15%

50%

100%

15%. Fee rates range from 15-20% of the amount borrowed.

How might a payday loan affect your credit report?

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If you don't pay the loan back, it could get turned over to a debt collector.

You could get sued if you don't pay the loan back.

Small credit reporting agencies might put your payday loan on a credit report.

All of the above

All of the above. The big three credit reporting agencies don't put payday loans on your report, but there are other ways that the loan activity could show up on your report.

If you put up a guitar at a pawnshop in return for a loan, what usually happens if you can't pay the loan back?

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The pawnshop can keep the guitar.

Nothing

You get an extra week to pay off the loan.

None of the above

The pawnshop can keep the guitar. This is the general rule for how these loans work.

A payday loan is designed to _______.

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Pay off your mortgage

Tide you over until your next paycheck

Provide an open-ended line of credit

Tide you over until your next paycheck. A payday loan is set up to pay short-term bills and to be repaid with your next paycheck.

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