ECONOMICS
ECONOMIC INSTITUTIONS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A loan you repay on your payday.
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Short term unsecured loan with very high interest rates.
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Short term secured loan with very high interest rates.
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Short term loan with low interest rates.
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Detailed explanation-1: -A payday loan is a short-term loan that the lender shall supply to a borrower at high interest. The amount for these loans may equal a borrower’s monthly income or next paycheck. Thus, in case of a lack of finances arising between payment cycles, it provides immediate credit or funds.
Detailed explanation-2: -Understanding Payday Loan Rates and Fees Unlike other personal loans, payday loans often feature interest rates ranging from 391% to 600%.
Detailed explanation-3: -Key Takeaways. Personal loans and credit cards come with high interest rates but do not require collateral. Home-equity loans have low interest rates, but the borrower’s home serves as collateral. Cash advances typically have very high interest rates plus transaction fees.
Detailed explanation-4: -Cost of a payday loan A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to about 30 percent.
Detailed explanation-5: -Payday loans are short-term loans for small amounts of money. They are available from high street shops and internet sites. Payday loans can be easy to get but interest rates are very high.