Since Jennifer needs to settle her monthly rent and decides to obtain a payday loan, she will certainly fall into a cycle of debt because of its recurring nature.
Payday Loans are short-term, low-balance cash advances usually offered to individuals with cash shortages at usury rates (high interest) because of the unsecured nature of the loans.
Amount of Payday Loan taken = $375
Repayment amount = $500
Interest expense = $125
Rate of interest = 33.33% ($125/$375 x 100)
Thus, by opting for a payday loan to settle her monthly rent instead of increasing her earnings, Jennifer entered into a cycle of debt.
Learn more about living on payday loans here: https://brainly.com/question/25239160
