The Ultimate Payday Loans Quiz

By: Staff
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About This Quiz

You have not been paying much attention to your finances and suddenly an expense that you were not prepared for hits you broadside. You know the bank is not going to be any help this time. Should you visit one of those payday loan places?

What should you keep in mind when considering a payday loan?

There are many options to find short-term financial help. Payday loans should be considered only in an emergency.

How many payday loan locations are there currently in the United States?

According to Community Financial Services Association of America, there were more than 22,000 payday loan locations in the United States at last count. With so many locations to serve you there should be one close by.

What is the dollar amount of loans granted per year by payday lenders?

According to Community Financial Services Association of America, some $40 billion worth of payday loans are granted in the United States each year. With such high fees, they surely made a huge profit on those loans.

What is the typical amount of a loan that you can arrange at a payday loan location?

The typical amount of a payday loan ranges from $50 to $500. The term for repayment is usually two weeks.

What do payday loan locations require from you as loan security?

Payday loan companies do not require any assets to secure a loan. They will require only contact, banking and employment information along with contact information of friends and family as references.

How do payday lenders normally asses their fees for providing a loan?

The most common fee assessment is $15 per $100 borrowed. That works out to an extremely high rate of interest.

What is the usual method used to repay a payday loan?

Most locations will require that you leave a postdated check for the loan amount plus fees when you arrange the loan. They will cash or deposit your check on the due date.

What can you do if you realize that you do not have enough money in your account to repay the loan?

Most locations will allow you to rollover the loan for another 14 days, but they will make you pay another fee for that service.

What is a very attractive feature of payday loan companies besides ease of acquiring a loan?

One of the most attractive features of getting a payday loan is you can go there after work and on Sundays. Often locations are open 24 hours a day.

What do you have to make sure of before you visit a payday loan outlet?

You need not worry if you have bad credit, because most of the payday loan businesses do not check your credit. The privacy and speed of service along with no credit hassle makes them attractive to people with poor credit.

What is a typical Annual Percentage Rate (APR) calculation for that $100 loan from a payday loan business?

The APR on a $100 loan works out to 391 percent and that is a lot of gravy to pay for a small short-term loan. This is the reason that you have to think hard and consider options before you take what appears as an attractive loan.

What happens if you have to rollover a payday loan after paying 391 percent interest?

Rolling over your loan to allow another two weeks to repay does not affect the APR unless the second fee is higher than $15. However, that loan just put you in debt a little more because of the additional fee.

What is good news surrounding the controversial way payday loan companies charge for loans?

Some state governments have enacted laws designed to regulate rates and fees charged by payday loan companies. Oregon for example has enacted legislation to restrict APR to 36 percent for small loans.

What is another restriction applying to payday loan companies that you should know about?

Payday loan companies are prohibited from charging more than 36 percent APR to military personnel. The Federal Trade Commission advises military personnel to seek financial assistance from military organizations that offer emergency money to members.

What is the best alternative available to an individual instead of resorting to a payday loan?

Many credit unions now offer small loans at very attractive interest rates that are substantially lower than any payday loan rate. Some credit unions even have special plans that help you get out of debt, save money and manage your finances.

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