Rather than the borrower paying a small rate of interest in each billing cycle like with a credit card, the borrower using a payday loan...

Is eligible to have their loan reduced if they make their first 6 payments on time.

Avoids interest by only taking out small loan amounts.

Pays a fee when they first receive the loan and must repay it to extend.

Pays one lump sum of all their interest after the first year of the loan.

The correct answer is letter "C": Pays a fee when they first receive the loan and must repay it to extend.

Explanation:

Payday loans are usually short-term loans -also called cash advance- with high-interest rates. Creditors, in this case, are small merchants that can request debtors information such as pay stubs and credit history to determine the amount of money they are eligible to request. A fee must be paid at the time of acquiring the debt. The debt should be repaid in a short-term period to an extent.

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