Interest Rates and Fees
- Any person can apply for payday loans which are usually issued in sums up to $1,000.
- It is common knowledge that interest rates charged on such loans are rather high ranging from 10% to 20%.
- The rates differ depending on the state and the compnay in the first place. However, legally operating lenders do not charge more than it is allowed by the state laws and therefore this infornmation should be taken into consideration.
Annual rate of interest charged in payday loan service is termed as Annual Percentage Rate, and it is often high due to the short-term and unsecured nature of this type of credit.
The rates differ with regards to a lender and a state. Some states have more restrictive rules about short-term lending, others are more lenient. The former either ban such type of credit on their territory entirely or request that lenders adhered to a fixed rate (usury cap) that cannot be exceeded; latter allow more freedom (they are minority at the moment).
- Cash advances are short in terms; and the typical repayment period does not exceed 2 weeks. Therefore, the period can be extended, if necessary.
Always read the loan terms stipulated in the agreement. For instance, additional services and facilities like rollovers involve extra fees and interest rates. Therefore be careful when using payday loan services to avoid unpleasant surprises.