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Personal Finance Courses: Predatory Lending

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Choose wisely. There is only one correct answer to each question.

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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.
Which of these lenders requires little or no credit check when loaning money to a borrower?
Choose wisely. There is only one correct answer.
Payday lender. Payday loans are fast and usually don't require a credit check.
3.
If you take out $1000 from a payday lender, a credit card, and a credit card cash advance, which will charge the most interest?
Choose wisely. There is only one correct answer.
The payday lender. By far, the payday lender will charge the most interest. The dollar amount difference between it and the credit cards will be immense. It should be noted that there are also options that are even lower in interest than the credit cards.
4.
A payday loan is designed to _______.
Choose wisely. There is only one correct answer.
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 don't pay back your payday loan, the lender could take you to court and sue you for it.
Choose wisely. There is only one correct answer.
True. Legally, the lender can do that if it wants. Of course, all lenders would rather not have to go that route if they can avoid it.