Payday Loan Interest Rates
Payday Loan Interest Rates
A payday loan is a short term loan made usually until the next payday of the borrower. The loan is non-secured except for the post dated check that is issued by the borrower. These loans usually require no credit check and can be obtained in a matter of hours instead of days or weeks. This article is aimed at the payday loan interest rates that are imposed. These rates can vary from state to state and even from lender to lender within the same state or even same city.
The payday loan interest rate is the extra fee imposed on the borrower for the ability to borrow money from a payday loan company. In most cases, the fee is set in dollars or a basic percentage of the amount borrowed. The fee, when given to the borrower in these terms, does not seem to be terribly high. However, when broken down into annual percentage rates (APR), the rates can exceed 300%. These rates usually vary from company to company, but in most cases, the companies keep their fees similar for competition purposes. Most people that are in need of money quickly pay little to no attention to the fine print that states the percentage rate of the loan.
In many situations, the loan amount plus the fees are too high for a borrower to repay at one time so they have the availability to roll over the balance. When this is done, there is always a service fee, sometimes equal to or much greater than the original service fee for the loan. There could also be a percentage rate increase on your loan. To avoid unnecessary fees, knowing that you will be able to pay a loan in full on the due date is imperative in taking out a payday loan.
A payday loan interest rate is often called an additional fee. This is to avoid some state laws which govern payday loan interest rates. Depending on the state in which the loan is originated, your rate could be higher or lower than in a neighboring state. In most states, there are laws that govern payday loans. These laws are more stringent in some states than in others. Online payday loan lenders are not always governed by the state laws in the state in which you live, so you may see a difference in an online lender and the neighborhood lender. Whichever type lender you choose, whether it be online or storefront, make sure that the interest rate is comparable to others in your area and that you are getting the best deal.
Getting a payday loan may seem like a great idea and a big help in some cases. These loans should be taken as a last resort after exhausting other means of borrowing money such as friends and family. If the loan is necessary, do research on the lender to make sure they are a reputable company with a good history in lending. Check with friends and family to see if they have had any experience with the company. Overall, just do your homework before even completing an application with one of these payday loan companies.
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