Test your knowledge

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Which of the following are you forbidden to spend payday loan money on?

Rent

Other loans

Car repairs

You are not forbidden to spend payday loan money on anything.

You are not forbidden to spend payday loan money on anything. There are no restrictions on what you can spend payday loan money on.

A payday lender does not legally have to identify the fees charged to your payday loan.

True

False

False. By law, a lender must spell out all fees to you in your contract.

As far as loans go, payday loans are generally small.

True

False

True. Payday loans are usually $500 or less, making them small.

How might a payday loan affect your credit report?

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.

The interest rates on payday loans are _______.

Higher than those of banks or credit unions

Lower than those of banks or credit unions

Normal

Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.