Test your knowledge

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Which of the following best describes how payday loans differ from bank and peer-to-peer (P2P) loans in terms of repayment time?

Choose wisely. There is only one correct answer.

You can pay back a payday loan over many years.

Payday loans must be repaid within weeks.

Payday loans and bank loans both offer similar repayment periods.

Payday loans have the longest repayment time.

Payday loans must be repaid within weeks. Banks and P2P platforms let you take much longer to pay loans back.

When you take out a payday loan, how long is the grace period for paying it back?

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Two weeks

One month

Two months

There is no grace period.

There is no grace period. Payday loans do not offer grace periods; you must pay them back on your payday or you will be charged late fees.

If you put up a guitar at a pawnshop in return for a loan, what usually happens if you can't pay the loan back?

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The pawnshop can keep the guitar.

Nothing

You get an extra week to pay off the loan.

None of the above

The pawnshop can keep the guitar. This is the general rule for how these loans work.

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.

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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