Test your knowledge

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What do borrowers use payday loans for?

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Medical emergencies

Regular bills

As an alternative to other loans

All of the above

All of the above. People take out payday loans for many different reasons.

If you have a short-term financial emergency, what is a low-cost way to obtain a loan?

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Payday loan

Emergency credit union loan

Credit card

Emergency credit union loan. Many credit unions and banks offer relatively low-interest short-term loans that can help tide you over a short-term financial emergency.

Which of the following are you forbidden to spend payday loan money on?

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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.

If you roll over a payday loan three times, you will be charged a new fee each time.

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True

False

True. You will be charged a new fee for each rollover.

The interest rates on payday loans are _______.

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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.

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