Loans Payday Loans

Question 1

What is the defining characteristic of a payday loan?

Accepted Answer

It is a short-term, high-interest loan typically due on the borrower's next payday

Answer

It is repaid in monthly installments over several years

Answer

It requires collateral such as a car or home

Answer

It is issued only by federal credit unions

Question 2

What is the typical Annual Percentage Rate (APR) associated with payday loans?

Accepted Answer

300% to 400% or higher

Answer

5% to 10%

Answer

15% to 25%

Answer

50% to 75%

Question 3

What do most payday lenders require as a primary qualification for a payday loan?

Accepted Answer

Proof of income and an active checking account

Answer

A credit score above 700

Answer

Real estate as collateral

Answer

A co-signer with good credit

Question 4

What is a 'rollover' in the context of payday loans?

Accepted Answer

Extending the loan term by paying an additional fee instead of repaying the full balance

Answer

Transferring the loan to another lender at a lower rate

Answer

Consolidating multiple payday loans into one payment

Answer

Automatically deducting the loan from the borrower's paycheck

Question 5

Which federal law requires payday lenders to disclose the APR and total finance charges to borrowers?

Accepted Answer

The Truth in Lending Act (TILA)

Answer

The Fair Credit Reporting Act (FCRA)

Answer

The Equal Credit Opportunity Act (ECOA)

Answer

The Fair Debt Collection Practices Act (FDCPA)

Question 6

What is the typical loan amount range for a payday loan in the United States?

Accepted Answer

$100 to $1,000

Answer

$5,000 to $25,000

Answer

$1,000 to $5,000

Answer

$25,000 to $50,000

Question 7

Which federal agency has primary supervisory and regulatory authority over payday lenders?

Accepted Answer

The Consumer Financial Protection Bureau (CFPB)

Answer

The Federal Reserve Board

Answer

The Office of the Comptroller of the Currency (OCC)

Answer

The Federal Deposit Insurance Corporation (FDIC)