Test your knowledge

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The interest rates on payday loans are _______.

Choose wisely. There is only one correct answer.

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.

How long do most payday loans last?

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A year

A month

Two months

Two weeks

Two weeks. Most payday loans last about the length of a pay period, which is two weeks.

It is possible to pay more in fees on a payday loan than the amount you originally borrowed.

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True

False

True. If you extend the loan or take out a different one to cover it, and you did this several times in a row, you might actually pay more in interest than the actual loan itself.

What are some things that a payday lender could do if you did not pay back a payday loan you took out?

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Turn your loan over to a debt collector

Sue you

Repossess your property that you put up as collateral

All of the above

All of the above. All of these are possibilities.

The interest rates of payday loans are very high.

Choose wisely. There is only one correct answer.

True

False

True. Payday loans have average annual interest rates of 500 percent--or more.

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