Payday Loans are expensive

A payday loan is indeed a very expensive loan, how many people in comparison to other types of loans. It is a norm that the annual percentage rate (APR) of a typical payday loan up to 300% and even receives a staggering 1,000%. However, as a long-term loan payday loan cash holding is costly only true if a borrower treat payday loans! Here are some details.

You will find that in fact, they are held responsible for this unfortunate situation. Most of these unfortunate “victims” share a common mistake – they are not planning their financial budget properly. You do not pay the loan, as it should be and the worst, if they roll over the loan on time again! What happens if a borrower until the loan without rolling over it clears? Certainly not the situation would get bad and disastrous.

Let us take a look at the true purpose of payday loans – emergency cash flow problems develop short run. Short enough to keep you on the next payday. It is hard to compare when consider those other fees such as late payment charge, free bounce back, NSF fee and so on. If all of these fees are converted to APR, they lead to an even higher rate! Well, maybe some claims that these fees are not a form of credit and APR does not therefore apply! Nevertheless, it is the same – the same money consumers pay from the perspective of the consumer!

Typical fees can be found under different circumstances, for example:

  • NSF fee on banks: $ 28
  • Traders returned check fee: $ 20
  • Credit Union NSF Fee: $ 18.91
  • Apartment rent late fee: $ 30.22
  • Mortgage bank late fee: $ 28.24
  • Auto Lenders late fee: $ 20.33
  • Utility late fee: $ 15.25
  • Connect utility fee: $ 44.75

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In comparison, if a year as APRs under a two-week term:

  • Payday loans with $ 15 fee $ 100 = $ 391% APR;
  • $ 100 bounced check with $ 48 NSF / merchant fees = 1,251% APR;
  • $ 100 credit card balance with $ 26 late fee = 678% APR;
  • $ 100 water utility bill with $ 50 late / connection fees = 1,304% APR.

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