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Personal Finance Courses:
Predatory Lending
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
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.
2.
Which of the following are you forbidden to spend payday loan money on?
Choose wisely. There is only one correct answer.
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.
3.
What are some things that a payday lender could do if you did not pay back a payday loan you took out?
Choose wisely. There is only one correct answer.
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.
4.
A payday loan is designed to _______.
Choose wisely. There is only one correct answer.
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.
5.
As a general rule, which of the following will charge the LEAST amount of interest if you take out a loan?
Choose wisely. There is only one correct answer.
A payday lender
A credit card
A credit card cash advance
A loan from a bank or credit union
A loan from a bank or credit union. As a rule, these loans have the lowest interest rates and charge the least amount of interest.
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