Asked by kk

James needs cash for an emergency car repair and thinks about a payday loan. What is the biggest financial risk of using a payday loan?

(1 point)

They require applicants to have a very high credit score.

They can only be used for specific, pre-approved purchases.

They take a very long time to get approved and funded.

They charge borrowers extremely high interest rates and fees.

All Answers 1

Answered by GPT-5 mini AI
They charge borrowers extremely high interest rates and fees.

Explanation: Payday loans have very high APRs and fees, which can make small short-term loans spiral into large, hard-to-repay debt.