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Personal Finance Courses:
Predatory Lending
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
You can get a short-term loan from your checking account through what is called _______.
Choose wisely. There is only one correct answer.
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.
2.
A payday lender does not legally have to identify the fees charged to your payday loan.
Choose wisely. There is only one correct answer.
True
False
False. By law, a lender must spell out all fees to you in your contract.
3.
How good does your credit need to be in order for you to take out a payday loan?
Choose wisely. There is only one correct answer.
Excellent
Very good
Average
It doesn't need to be good
It doesn't need to be good. You don't need good credit in order to get a payday loan. Many borrowers do not have good credit.
4.
As far as loans go, payday loans are generally small.
Choose wisely. There is only one correct answer.
True
False
True. Payday loans are usually $500 or less, making them small.
5.
The interest rates on payday loans are _______.
Choose wisely. There is only one correct answer.
Higher than those of banks or credit unions
Lower than those of banks or credit unions
Normal
Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.
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