Test your knowledge

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A payday loan is designed to _______.

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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.

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.

Predatory lending can be identified by _______.

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Its high costs

Its low costs

Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.

Paying off payday loans on time, every time, is a great way to build up your credit score.

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True

False

False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.

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.

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