Test your knowledge

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Predatory lending can be identified by _______.

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Its high costs

Its low costs

Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.

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.

If you don't pay back your payday loan, the lender could take you to court and sue you for it.

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True

False

True. Legally, the lender can do that if it wants. Of course, all lenders would rather not have to go that route if they can avoid it.

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.

How soon after receiving your funds from a payday loan can you spend the money?

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One week

You must wait until the next morning

You must wait 24 hours for the application to clear

Right away

Right away. You may spend the money as soon as you want.

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