Question

why is a payday loan considered to be an unwise way to finance a purchase? everyone in the company can go online to see the names of people who have had to take payday loans. the person who takes a payday loan will not be eligible for a raise for a year. payday loans carry very high fees equivalent to more than a 100% annual interest rate (apr) the person’s employer will probably give the employee who takes a payday loan a poor job evaluation.

Explanation:

To determine why a payday loan is unwise, we analyze each option:

• The first option about publicizing names of borrowers is not a standard reason for payday loans being unwise (privacy and such practices are not typical).
• The second option about ineligibility for a raise is not a standard consequence of taking a payday loan.
• The third option: Payday loans are known for extremely high fees, often with APRs exceeding 100% (sometimes much higher), making them a costly and unwise financing option due to the heavy debt burden from high interest/fees.
• The fourth option about poor job evaluations due to payday loans is not a standard or typical consequence.

Answer:

C. Payday loans carry very high fees equivalent to more than a 100% annual interest rate (APR)