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 (B)</p> Signup and view all the answers

Why are cash advances considered predatory?

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

What is the collateral required for pawnshop loans?

<p>An item of value (D)</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 (B)</p> Signup and view all the answers

How do pawnshop loans differ from payday loans?

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

Why are payday loans considered unaffordable to borrowers?

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

What is a private loan?

<p>A loan from parents, relatives, or friends (D)</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 (A)</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 (A)</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 (C)</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 (A)</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 (B)</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 (A)</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 (B)</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 (B)</p> Signup and view all the answers

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