Payday Loans
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Questions and Answers

Which type of loan is considered predatory because of its misleading terms and high fees?

  • Cash advances
  • Payday loans (correct)
  • Pawnshop loans
  • Personal loans

    • What is the typical cost of APR for payday loans?

  • 100% APR
  • 200% APR
  • 300% APR
  • 400% APR (correct)

    • What is the purpose of payday loans?

  • To encourage responsible borrowing
  • To offer quick cash for emergencies (correct)
  • To provide long-term financial stability
  • To help borrowers save money

    • How do cash advances differ from payday loans?

    <p>Cash advances are offered through credit card providers</p> Signup and view all the answers

    Why are cash advances considered predatory?

    <p>Because they start accumulating interest immediately</p> Signup and view all the answers

    What is the collateral required for pawnshop loans?

    <p>An item of value</p> Signup and view all the answers

    What happens if a borrower doesn't repay a pawnshop loan?

    <p>The pawnshop keeps the item and sells it for profit</p> Signup and view all the answers

    How do pawnshop loans differ from payday loans?

    <p>Pawnshop loans are based on collateral</p> Signup and view all the answers

    Why are payday loans considered unaffordable to borrowers?

    <p>Because they have high fees and interest rates</p> Signup and view all the answers

    Which of the following is a potential risk of borrowing from a pawn shop?

    <p>The item used as collateral may be lost</p> Signup and view all the answers

    What is a private loan?

    <p>A loan from parents, relatives, or friends</p> Signup and view all the answers

    What is a potential disadvantage of getting a private loan from parents, relatives, or friends?

    <p>The relationship may be damaged if the loan is not paid back</p> Signup and view all the answers

    What should borrowers consider before pawning an item at a pawn shop?

    <p>The storage and insurance fees</p> Signup and view all the answers

    What type of loan is typically small and may or may not involve paperwork and interest rates?

    <p>Private loan</p> Signup and view all the answers

    What is the potential consequence if a private loan is not paid back within the agreed upon terms?

    <p>The borrower may damage their relationship with the lender</p> Signup and view all the answers

    What should everyone involved in a private loan know and understand?

    <p>The potential consequences of not repaying the loan</p> Signup and view all the answers

    What is a potential disadvantage of borrowing from a pawn shop?

    <p>The item used as collateral may be lost</p> Signup and view all the answers

    What is a potential disadvantage of getting a private loan from parents, relatives, or friends?

    <p>The relationship may be damaged if the loan is not paid back</p> Signup and view all the answers

    What should borrowers consider before pawning an item at a pawn shop?

    <p>The storage and insurance fees</p> Signup and view all the answers

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