As you may know, the term for re-payment in payday loan varies from one to another lender. There is no exact definition. However, it is believed that the interest rate is high, and short-term. Depending on the law in your state, payday loans may be available through local lenders or online. The loans are for small amounts, and many states limit the amount of the payday loan. The $ 500 amount is a common loan limit, although some limits go above and below this amount.
How you pay?
The payday loan is usually paid in a lump sum on the next payday, or when income is received from another source, such as a pension or social security cheque. The due date is generally two to four weeks from the date of the loan. The specific due date is stated in the payday loan agreement. To repay the loan, you generally write a post-dated cheque for the entire balance, including fees, or you offer the lender an authorization to debit the funds from your bank account, credit union, or a prepaid card. If you do not repay the loan on or before the due date, RedPayday can cash the cheque or withdraw the money electronically from your account.
The cost of a payday loan
Many state laws set a maximum amount for payday loan charges, ranging from $ 10 to $ 30 for every $ 100 borrowed. A typical two-week payday loan, with a fee of $ 15 per $ 100, corresponds to an annual effective rate of nearly 400 percent. By comparison, the APR on credit cards can range from about 12 percent to about 30 percent.
Other characteristics of the loan may vary. Payday loans are often structured to be paid in one lump sum. Some state laws allow lenders to “roll over” a loan when it matures, so that the consumer only pays the loan fees and the lender extends the maturity date. In some cases, payday loans may be structured to be paid in installments over a longer period.
Conclusion
According to a survey, most people who take out payday loans say they have other options. Borrowers say they could reduce expenses, delaying payment of some bills, borrow from family and friends, get a loan from a bank or credit union, using a credit card, etc. However, none has the potential to compete against payday loan. A payday loan is safe, secure till you are taking it from a reputed lender.