How Much Do Payday Loans Cost

 

How Much Does A Fast Cash Loan Cost

Payday loans have a notorious reputation for having ridiculously high interest rates. They may seem like a good solution in emergency situations, but considering their high cost are they really worth it? Let’s evaluate the general cost of most payday loans.
A few years back, payday loan lenders only offered up to $500. Now you can loan as much as $1,000 to even $1,500 at one time. However, borrowing the maximum amount that you can may not be the best thing to do. Higher loan amounts also mean higher interest. Some companies may also charge you extra if you exceed certain amounts. The best thing to do would be to take only whatever money you need at that time.

Payday Loan Interest Rates

The most unattractive aspect of payday loans is the interest. Most companies will charge you amounts ranging from $8 to $30 each week for every $100 borrowed. The annual percentage rate or APR can reach up to 300-900%. This looks outrageous compared to most credit card loans, which only charge around 8-30% APR.
Another thing about payday loan interest is that it adds up daily. Since payday loans are short-term (around two weeks), the most logical way to calculate interest is per day. This makes paying on time absolutely critical. If you borrow $500 for just two weeks at an interest rate of approximately $10 per $100 per week, that would be $50 in one week or $100 in two weeks. If you aren’t able to pay on time, your debt will roll over. In a matter of weeks, you could be paying an amount equal to or even more than the price of your loan. Talk about overspending.
But that’s not all – there are also such things like extra charges. Most payday loans take just hours (sometimes even just an hour) to process. If you apply online, you can get your cash in a day or two. In cases of emergencies, you might want to speed up this already fast process and ask for a rush delivery. Guess what? That means extra fees. Also, since payday loan interests are charged per day or per week, you might want to pay in advance to avoid paying too much. But some companies will even charge you extra for paying too early since that would mean that they can’t collect extra interest from you. Loan sharks don’t like being cheated off their interest. If you think the interest is unbelievable, the extra charges will be inhumane.

Payday Loan Tips

The bottom line is – yes, payday loans are expensive. But in some cases, they might well be your only option. The best thing to do would be to research on the best, most affordable and most reliable lender you can find. Internet scams and hidden charges are getting more and more common nowadays. Always make sure to read all your contracts before signing anything, and never be too shy or too hasty to ask questions. Where your money is concerned, you can never be too careful.