Predatory Lending

Which of these is NOT a strategy used by payday loan lenders?

• Charging extremely high interest rates (often over 100%).

• Targeting high income households that in good financial standing

• Charging "hidden fees" that are kept in the fine print

• Targeting low income households in desperate circumstances

True or False:  Rent-to-own total prices are comparable to those you'd find in a store. 

• True
• False

True or False: Because payday loans have such high interest rates, they're typically used by high-income households. 

• True 
• False

True or False: Check cashing outlets do not charge a fee to cash the checks brought in.

• True

• False

True or False:  Many short-term lenders realize their borrowers will never be able to pay off their loans on-time, but they still lend anyway. 

• True 
• False 

True or False: It's possible to get payday loans, rent-to-own furniture, and other predatory loans without passing a credit check.

• True

• False

Jake takes out a payday loan of $300. In two weeks, he doesn't have the money to repay it in full. Select which options keeps Jake trapped in the cycle of repayment.

• Jake sells his video game system and game collection and pays off the loan.

• Jake borrows $300 from his father to pay back the loan.

• Jake uses his paycheck to pay the $300, but then immediately takes out another $300 at the same location to pay bills.

• Jake sells some clothes, furniture, and old sports equipment to pay off the loan

True or False: Pawn shops purchase your items from you at a value that is fair.

• True

• False

True or False: Payday loans usually have reasonable interest rates around 20%

• True

• False

True or False: Rent to own centers and payday lenders use advertisements designed to trick their customers.

• True

• False