The statements about payday loans can be analyzed as follows:
A. False - Payday loans usually have high interest rates compared to traditional loans. They can carry annual percentage rates (APRs) that are extremely high.
B. False - Payday loans often come with additional fees, which can further increase the cost of borrowing.
C. True - Payday loans can trap borrowers in a cycle of debt due to high interest rates and fees. Many borrowers find themselves needing to take out new loans to pay off previous ones.
D. False - While you typically need to have a checking account to qualify for a payday loan, you do not need an excellent credit score. In fact, many payday lenders do not check credit scores at all, making these loans accessible to those with poor credit.
Based on this analysis, the only true statement is:
C. Payday loans get borrowers into a sometimes inescapable cycle of borrowing money because of the high interest rates and fees.