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Personal Finance Courses: Predatory Lending

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1.
A payday loan is designed to _______.
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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.
2.
If you are behind on a non-payday loan, why should you talk with the creditors about it?
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They would rather work with you than have to sell your loan to a debt collector. If they sell your loan to a debt collector, they will get very little for it. They WANT to work with you rather than see that happen.
3.
The interest rates of payday loans are very high.
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True. Payday loans have average annual interest rates of 500 percent--or more.
4.
All credit cards are a form of predatory lending.
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False. Some credit cards have very high fees and other predatory features, but many of them do not.
5.
What is a typical fee on a payday loan?
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15%. Fee rates range from 15-20% of the amount borrowed.