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Personal Finance Courses: Predatory Lending

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1.
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.
2.
When you take out a payday loan, how long is the grace period for paying it back?
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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.
3.
The interest rates on payday loans are _______.
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Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.
4.
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.
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.
5.
How might a payday loan affect your credit report?
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All of the above. The big three credit reporting agencies don't put payday loans on your report, but there are other ways that the loan activity could show up on your report.