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Personal Finance Courses: Predatory Lending

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1.
What is a typical fee on a payday loan?
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15%. Fee rates range from 15-20% of the amount borrowed.
2.
If you have a short-term financial emergency, what is a low-cost way to obtain a loan?
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Emergency credit union loan. Many credit unions and banks offer relatively low-interest short-term loans that can help tide you over a short-term financial emergency.
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.
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.
5.
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.