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Personal Finance Courses: Predatory Lending

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1.
The interest rates on payday loans are _______.
Choose wisely. There is only one correct answer.
Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.
2.
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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All of the above. All of these are possibilities.
3.
If you take out $1000 from a payday lender, a credit card, and a credit card cash advance, which will charge the most interest?
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The payday lender. By far, the payday lender will charge the most interest. The dollar amount difference between it and the credit cards will be immense. It should be noted that there are also options that are even lower in interest than the credit cards.
4.
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.
5.
As far as loans go, payday loans are generally small.
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True. Payday loans are usually $500 or less, making them small.