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Personal Finance Courses: Predatory Lending

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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. Interest rates on payday loans are generally much higher than those of other loans.
2.
A payday lender does not legally have to identify the fees charged to your payday loan.
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False. By law, a lender must spell out all fees to you in your contract.
3.
Paying off payday loans on time, every time, is a great way to build up your credit score.
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False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.
4.
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.
5.
If you have a short-term financial emergency, what is a low-cost way to obtain a loan?
Choose wisely. There is only one correct answer.
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.