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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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Review your answers below to learn more.
1.
The interest rates of payday loans are very high.
Choose wisely. There is only one correct answer.
True. Payday loans have average annual interest rates of 500 percent--or more.
2.
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.
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.
When you take out a payday loan, how long is the grace period for paying it back?
Choose wisely. There is only one correct answer.
There is no grace period. Payday loans do not offer grace periods; you must pay them back on your payday or you will be charged late fees.
5.
If you put up your car as collateral for a car title loan, what happens to your car if you pay the loan back?
Choose wisely. There is only one correct answer.
You retain ownership of your car. As long as you pay the loan back, you legally must get your car back.