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Personal Finance Courses: Predatory Lending

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1.
If you don't pay back your payday loan, the lender could take you to court and sue you for it.
Choose wisely. There is only one correct answer.
True. Legally, the lender can do that if it wants. Of course, all lenders would rather not have to go that route if they can avoid it.
2.
It is possible to pay more in fees on a payday loan than the amount you originally borrowed.
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True. If you extend the loan or take out a different one to cover it, and you did this several times in a row, you might actually pay more in interest than the actual loan itself.
3.
Paying off payday loans on time, every time, is a great way to build up your credit score.
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False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.
4.
Although people who take out payday loans use them for many different purposes, what is the most common use?
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Regular living expenses. Most borrowers use payday loans for regular living expenses.
5.
Predatory lending can be identified by _______.
Choose wisely. There is only one correct answer.
Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.