Which description matches a payday loan?

• A. A short-term loan that provides immediate cash by securing a borrower's check or receiving authorization for automatic withdrawal from the borrower's bank.
• B. A long-term loan with installment payments
• C. A credit card balance transfer
• D. A grant for tuition

Answer: (A)

Payday loans are short-term, high-cost borrowing intended to be repaid by the borrower's next payday. They are typically issued quickly to provide cash fast and are secured by the borrower giving a post-dated check or authorizing an automatic withdrawal from their bank account on the due date. This description matches the option describing a short-term loan with immediate cash and security via a check or bank withdrawal.

Long-term loans with installment payments involve repayment over time, not the quick, single-payday focus of a payday loan. A credit card balance transfer moves debt from one card to another and isn’t about providing immediate cash on a short-term basis. A grant for tuition is financial aid that doesn’t need to be repaid, not a loan.