Test your knowledge

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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.

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.

What is a typical fee on a payday loan?

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15%

50%

100%

15%. Fee rates range from 15-20% of the amount borrowed.

You can get a short-term loan from your checking account through what is called _______.

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Overdraft protection

A checking account loan

A cash advance

Overdraft protection. Overdraft protection simply means overdrawing your checking account. You will likely be charged a fee for it.

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.

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