Test your knowledge

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

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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.

Predatory lending can occur with which of the following?

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Tax refunds

Payday loans

Rent-to-own stores

All of the above

All of the above. All of these and many more can be involved in predatory lending. You should evaluate all of them carefully.

When you take out a payday loan, how long is the grace period for paying it back?

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Two weeks

One month

Two months

There is no grace period.

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.

A payday lender does not legally have to identify the fees charged to your payday loan.

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True

False

False. By law, a lender must spell out all fees to you in your contract.

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.

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