Remember: A very short loan can cost a lot for the days it lasts. A fee buys more time, not a smaller loan. Ask how many coins in all, when it is due, and what happens if it cannot be paid.
Read and answer
Read the story first, then answer.
Omar's bike chainIn the pretend town of Cog Hill, Omar's bike chain snapped, and the mender said it would cost ten coins. Omar had two coins in his purse, and payday was two weeks away. A bright sign said, "Cash today!" The shop lent for very short times, and that is called a payday loan: borrow now, and pay it back on payday. The shop lent Omar ten coins with a fee of three coins, so thirteen coins were due on payday. Payday came and Omar's pay was twelve coins, but food and rent took nine, which left three. He was ten short. The shop said, "Pay the three-coin fee and the loan rolls over." That meant two more weeks, with ten still owed and a new fee. After three rolls, Omar had paid nine coins in fees and still owed ten. The fees bought more time, not a smaller loan.
1
Omar borrows 10 coins and the fee is 3 coins. On payday coins are due.
2
Payday: Omar's pay is 12 coins. Food and rent take 9. He has coins left.
3
Omar has 3 coins left, but 13 are due. He is coins short.
4
The shop says, "Pay the fee and the loan rolls over." What does that mean?
The shop forgives the feeThe loan is paid offThe fee buys two more weeks, and the ten is still owed
5
Look at the table. After 3 rolls, the fees Omar has paid add up to coins.
6
After three rolls, Omar still owes the same ten coins.
TrueFalse
7
A cousin takes a cash advance of 10 coins. A card gives out the cash, and a fee of 1 coin is taken at once. How many coins does the cousin owe on day one?
10 coins11 coins9 coins
Order, match and fix
8
Number what happened to Omar.
The bike chain snaps
The loan rolls over
Omar borrows ten for two weeks
Payday comes up short
9
Join each word to what it means.
1payday loan
2fee
3roll over
4cash advance
Apay a new fee for two more weeks
Bborrow now, pay it back on payday
Cthe price paid for the loan
Da card gives out cash, with a fee at once
10
Circle each good question to ask before any loan.
How many coins in all?What color is the sign?When is it due?What happens if I cannot pay?How big is the shop?
11
Omar says: every fee I pay makes my loan smaller. Is Omar right?
YesNo
12
Which costs the least to pay back: a payday loan of 10 (fee 3), a cash advance of 10 (fee 1), or 10 from Gran with no fee?
10 from Gran, no fee: 10 to pay backThe cash advance: 11 to pay backThe payday loan: 13 to pay back
13
Stretch: after six rolls, Omar has paid coins in fees, and still owes ten.
14
Write three questions to ask before any loan.
15
Draw Omar's loan rolling over three times. Show the fee each time.
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