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Personal Finance Courses: Predatory Lending

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1.
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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Payday loans must be repaid within weeks. Banks and P2P platforms let you take much longer to pay loans back.
2.
How long do most payday loans last?
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Two weeks. Most payday loans last about the length of a pay period, which is two weeks.
3.
Predatory lending can be identified by _______.
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Its high costs. Predatory lending involves a business charging higher-than-normal costs of various kinds.
4.
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.
5.
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. Overdraft protection simply means overdrawing your checking account. You will likely be charged a fee for it.