Which of these can help you avoid using alternative credit:

Only borrowing money for needs - not for wants

Learning the disadvantages of alternative credit

Which of these are good alternatives to alternative credit:

Either of these would reduce the odds that you will need alternative credit

Only borrowing money for needs, not wants

Neither of these would reduce the odds that you will need alternative credit

Generally, your _____ should be less than 10 % of your ____.

Monthly debt payment (other than mortgage)

Total debt (other than mortgage)

Generally, your _____ should be less than 20 % of your ____.

Total debt (other than mortgage or student loans)

Total debt (other than mortgage)

Generally, your student loan debt when you graduate college should be _____ % or less of your ____.

Monthly debt payment (other than mortgage)

Generally, your _____ when you graduate college should be 100 % or less of your ____.

Total debt (other than mortgage)

Monthly debt payment (other than mortgage)

Monthly debt (other than mortgage or student loans)

Which of these are NOT true statements about Payday Loans

The annual interest rate is about 15%, which is lower than the interest rate on most credit cards

Lenders charge a fee of about 15%

The loans are usually short-term - about two weeks or so

The borrower writes a post-dated check, or agrees to an automtic withdrawal from their bank account

The lender earns a high return with a low risk

Your monthly debt payments (not including your mortgage) should be less than which of these:

20 % of your monthly net income

Your total debt (not including your mortgage or student loans) should be less than which of these:

20 % of your monthly net income

Your annual housing cost should be less than which of these:

20 % of your monthly net income

If you write a bad check to a Payday Lender, all of these things can happen, EXCEPT . . . . .

You can be charged for committing a crime

The lender can charge you a $30 late fee

Your bank can charge you an overdraft fee

If a lender says "gauranteed approval" :

they normally loan money to people who have no alternative

they normally have high interest rates

they normally loan money to people who did not have a financial literacy class in high school

If a lender says "no credit check required" :

they normally loan money to people who have no alternative

they normally have high interest rates

they normally loan money to people who did not have a financial literacy class in high school

Which of the following statements about payday loans are TRUE?

Payday loans get borrowers in an inescapable cycle of borrowing money because of the high-interest rates and fees.

Payday loans usually have low-interest rates.

Payday loans do not have any additional fees like other types of unsecured loans.

To qualify for a payday loan you must have a checking account and excellent credit score.

Which of these are true statements about how monthly interest expenses are calculated:

The principal goes down each month,

Interest expense is principal times interest rate

Interest expense goes down each month

What are TWO reasons payday loans are considered predatory?

They use deceptive marketing tactics

They make a profit from the loans they make

If you default on a payday loan, which of these can happen:

A collection agency will try to collect the money from you

The lender can put a lien on your house

The lender can garnish your wages

Which of these are often better than getting a payday loan:

Borrow money from friends or family

Which of these is the most common outcome when a payday loan comes due:

the borrower pays another fee to roll the loan over for another two weeks

the lender cashes the check and there IS money in the account

the lender tries to cash the check but there is NOT money in the account

What can you do to avoid being in a financial bind that forces you to get a payday loan:

Keep monthly debt payments at 10% or less of your monthly income

Keep total debt 20% or less of your annual income

Keep your housing expenses at 30% or less of your income

F24 - Credit Basics - TH

Authored by Dean Kuckelman

Financial Education

12th Grade

Used 13+ times

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51 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If your loan is secured by some collateral, you can usually get:

More money

Longer payback

Lower interest rates

All of these

None of these

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of these is NOT a closed-end loan:

Credit card

Car loan

Mortgage

Student loan

MULTIPLE SELECT QUESTION

30 sec • 1 pt

Payday lenders verify which two of these things before loaning money:

Employment

Source of income

Credit score

Debts to other lenders

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The loan amount for a Payday loan is $ _____ or less.

400

600

2 to 4

500

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The time to pay back a Payday loan is typically about ____ weeks.

400

600

2 to 4

500

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of these are reasons why borrowers often can't repay on time and have to keep rolling over or taking out new payday loans to cover the last loan:

High fees

Short terms

Both of these

Neither of these

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

According to the CFPB, more than ______ % payday loans are reborrowed at least once:

25 %

80 %

100 %

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F24 - Credit Basics - TH

If your loan is secured by some collateral, you can usually get:

Which of these is NOT a closed-end loan:

Payday lenders verify which two of these things before loaning money:

The loan amount for a Payday loan is $ _____ or less.

The time to pay back a Payday loan is typically about ____ weeks.

Which of these are reasons why borrowers often can't repay on time and have to keep rolling over or taking out new payday loans to cover the last loan:

According to the CFPB, more than ______ % payday loans are reborrowed at least once:

According to the CFPB, about ______ % payday loans are reborrowed at least nine times:

Pawn shops usually loan you ______ your item is worth.

Prices at rent to own stores are ____ prices at stores where you pay cash or use a credit card.

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