Typical Rates And Terms
Typical Payday loan rates and terms are generally expressed in amount per $100 borrowed. This could be either a percentage or dollar amount. Most payday lenders charge between $10 and $35 per $100 borrowed. If 10%-35% seems high to you, remember that this is an unsecured loan without a credit check that is intended to be used as emergency cash and paid back quickly. Interest is often rolled over or compounded if the loan is not paid back on the borrower’s next pay day. The percentage rate attached to a short-term loan is the interest due on your first due date. If you do not pay the loan back on that due date, additional interest will be added to your next due date.
The terms and APR (annual percentage rate) charged for your payday loan will depend on the individual applicant information you provide — as well as the state and lender with whom you are matched. Upon completion of a payday loan application, the appropriate lender will provide you with comprehensive details of your loan information. The payday loan information will include a full APR and fee disclosure, including all relevant information regarding the loan payback date. At this time, the applicant is under no obligation. It is strongly advised that each applicant review the payday loan documentation fully before accepting the payday loan and associated terms. Again, as an applicant, you are not under any obligation to accept the loan.
Borrowers who are considering a short-term loan should be aware that there may be better alternatives in terms of loan APR available through other lending agencies or other loan types. We suggest printing or saving a copy of your payday loan offer and documentation for future reference.
In most cases, the finance fee will be 30% of the balance, or $30 per $100 borrowed. Payday loans are due in full on your next pay date. In some cases, the terms and rates change based on your pay schedule. Check with your lender about different rates and due dates if you are paid weekly or monthly.
Short-Term Loans Should Include No Hidden Rates or Fees
The payday loan offer documentation that you are provided should disclose completely your loan APR and any associated fees. If a loan company states a low fee – such as $10 per $100 – beware of possible hidden fees such as application fees, rollover fees, and late fees. Trustworthy lenders will disclose any potential fees up front and have no mandatory fees outside of the interest rate. If a lender wants to charge you extra application fees or loan management fees you should look elsewhere. The lowest APR is not always the best deal.
What is APR?
The annual percentage rate or APR is a calculation loan fees in relation to the amount of money being borrowed. It is intended to allow consumers to more easily compare the costs long-term borrowing.
APR is very useful when comparing long-term loan costs, such as a home mortgage or car loan. It is less useful when applied to short-term loans such as payday loans or credit card rates.
There are two types of APR: nominal and effective. Nominal APR is calculated as: the rate for a payment period, multiplied by the number of payment periods in a year. Effective APR can include various fees, service charges, and compound interest. The APR can also vary greatly based on one-time fees, interest only payments, and other variances of individual loan types. APR will always be disclosed before the loan is finalized so that customers can make an informed decision.
Since APR is a yearly figure and a short-term loan is intended to be repaid in a number of weeks, the APR will always appear high when compared to other loan types. Thus, the APR comparison tool is not perfect. The best way to determine what you will have to pay back is to know and understand the terms of your loan. The important numbers are dollar amount or percent of interest charged per $100 borrowed, the length of time before you will pay off your loan in full, and any associated fees in the case of rollovers, extensions, or missed payments. To get the lowest fees on any short-term loan it is best to pay the loan off as soon as possible.