A Complete Guide to Payday Loan Interest Rates, Costs, and Fees
Aug 17, 2019 07:29
Getting a payday loan can be a great idea as long as you understand how they work. Click here to learn about payday loan interest rates, costs, and fees.
Your bills are due. Your payday is still 5 days away. What are you going to do? An option that you might consider is to take out a payday loan. Payday loans are designed to help individuals pay for necessities in the period of time before their next payday arrives. While these loans have drawbacks, they can be an appropriate option for some. Hoping to learn a little more about payday loan interest rates and fees? Then read on. We're going to cover everything you need to know.
Payday Loan Application Requirements
The first thing you might be wondering is: "Do I qualify for a payday loan?" As long as you have some sort of income, the answer is likely "yes". After all, you have to have a way to pay the loan off over time. In addition to having income, you must also be 18 years of age and live in the state in which you're applying. Current military members, as well as those who have recently filed for bankruptcy, are also forbidden from taking out payday loans.
If you meet these specifications, you can go ahead and apply. To apply, you'll likely need to supply your social security number, a valid email address, your phone number, your bank account routing and account numbers, and proof of income. When applying, you can do so either online or in-person. Most lenders have both virtual and physical channels through which this can be done. Note, however, that applying in-person is typically the fastest way to be approved for the loan.
Payday Loan Application Fees
You'll be pleased to find out that there are no application fees associated with payday loans. You can apply for as many payday loans as you want without having to put any money down. Note, however, that some states put limits on how many paydays loans a person can take out at once. So, while you may be able to apply for a number of different loans at once, you won't necessarily be able to accept money from each and every lender.
Payday Loan Interest Rates
The big issue with payday loans is that they carry exceedingly high-interest rates. In fact, their interest rates dwarf most other loans in existence, usually coming out to around 400% annually. Typically, a $15 fee is charged per $100 taken out. So, if you take out $500 and are given two weeks to pay it off, you will owe $575 at the end of the two weeks.
Make note, though, that this is not a hard and fast rule. Different payday loan companies charge different interest rates. For instance, some might only charge a $10 fee per $100 loaned. Conversely, some might charge a $20 fee per $100 loaned.
Late Fees Associated With Payday Loans
Curious as to whether payday loans have late payment fees? They don't. However, this doesn't mean that they can't cause you harm. They can and in quite a big way. Generally, if you're late to pay off your payday loan, your account will be sent to a debt collector. The debt collector will attempt to get the money from you, but -- if you don't pay -- your loan will eventually go into default.
At this point, a number of different things can happen. First off, your credit score will take a hit. Expect it to drop by at least double digits. Secondly, the money will be taken from you, either directly from your bank account or from your paychecks. If this action sends your bank account balance below zero, you'll have to pay overdraft fees as well. In essence, it's in your best interest to pay off your payday loans as soon as possible. You'll save your credit, your bank account, and yourself (from a potential trip to the courthouse).
Payday Loans Due Dates
Now that you know a little something about payday loan late payment fees, you might be wondering about due dates. In the vast majority of cases, payday loan payments are due two weeks from the time the loan is taken out. Note, however, that some lenders require you to pay your loan back on the day of your payday, regardless of how much time has elapsed. In other cases, however, lenders might even give you up to 4 weeks to make your payment. Each lender is different when it comes to due dates. The only way to know for sure is to ask.
Payday Loan Borrowing Limits
The amount of money you can borrow via payday loan is dependent on the size of your income. The higher your income, the more money you can take out. At most, you'll be allowed to take out an amount that is equal to a single one of your paychecks. However, this is not true for everyone. For exact information pertaining to borrowing limits, you'll have to ask your lender.
Payday Loans and Credit
You might also be wondering how taking out a payday loan would affect your credit. In the vast majority of cases, it wouldn't. As long as you pay off your loan in the allotted period of time, your credit score will remain where it is. In fact, the three primary credit bureaus (Equifax, TransUnion, and Experian) won't even know that you took a loan out. It should also be mentioned that you don't necessarily need a credit score in order to obtain a payday loan. This is one of the few loans in which an acceptable credit score is null and void.
Now that you know a little something about payday loan interest rates and fees, you might be searching for information on other loans. If so, you're in the right place. Fooyah has tons of financial information for you to peruse. Browse our other financial articles now!
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