Which of the following best explains why many people use payday loans despite their potential negative consequences?

• A. Payday loans typically offer the lowest interest rates available.
• B. They often lack access to traditional banking or credit options.
• C. Most people use payday loans to invest in long-term assets.
• D. Payday loans are usually provided by government agencies.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the context of payday loans. Payday loans are short-term, high-interest loans typically used by individuals who need quick cash before their next paycheck.
2. Step 2: Analyze each option given in the problem to determine which best explains why people use payday loans despite potential negative consequences.
3. Step 3: Recognize that payday loans usually do not offer the lowest interest rates; in fact, they often have very high interest rates, so the first option is incorrect.
4. Step 4: Consider the accessibility of traditional banking or credit options. Many people who use payday loans do so because they lack access to traditional financial services, making the second option the most plausible explanation.
5. Step 5: Note that payday loans are generally not used for investing in long-term assets and are not typically provided by government agencies, so the third and fourth options are unlikely.