Course Quiz - Financial Fitness Center

1.

Which of the following best describes how payday loans differ from bank and peer-to-peer (P2P) loans in terms of repayment time?

You can pay back a payday loan over many years.

Payday loans must be repaid within weeks.

Payday loans and bank loans both offer similar repayment periods.

Payday loans have the longest repayment time.

Payday loans must be repaid within weeks. Banks and P2P platforms let you take much longer to pay loans back.

2.

How might a payday loan affect your credit report?

If you don't pay the loan back, it could get turned over to a debt collector.

You could get sued if you don't pay the loan back.

Small credit reporting agencies might put your payday loan on a credit report.

All of the above

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.

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?

The payday lender

The credit card

The credit card cash advance

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.

The interest rates on payday loans are _______.

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.

5.

As far as loans go, payday loans are generally small.

True

False

True. Payday loans are usually $500 or less, making them small.

Test your knowledge

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