Payday Loans

How To Review Cash Advance Fee Before Borrowing A Payday Loan?

Payday loans are no doubt one of the most popular financing solutions to those who need extra cash instantly to meet their urgent financial requirements, but at the same time, these loans are also notorious for the extremely high cash advance fee they charge. If a vast majority of payday borrowers are getting trapped into a nasty cycle of debt, many of them are even getting bankrupt, and even many states have come up with laws to ban these small short-term loans, it only indicates one thing – there is something seriously fishy about it. Therefore, no matter how urgently you need some extra cash, you are strongly recommended to review the cost of the loans thoroughly and determine whether you can afford to repay it on the next payday.

Look At The Actual Amount Of Interest

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When it comes to reviewing the cash advance fee associated with a payday loan, you should first look at the amount of interest you will have to pay. In general, a payday loan company may require you to pay anywhere around $30 to $40 for every $100 of payday loan you borrow for fourteen days. It means if you are borrowing for 28 days, the amount of interest will just get double i.e. $60 to $80 for every $100. If you are borrowing $500 for a 14-day period, you should expect to repay anywhere around $650 to $700. Likewise, if it is for a 28-day period, you will have to repay around $800 to 900.

Review Additional Charges

It is very important for you to keep in mind that the cash advance fee does not just constitute the amount of interest; payday lenders charge an array of additional finance charges also, such as in terms of processing fee, approval fee, fund transfer fee and others. The additional charges usually amount to around $15 to $30 (or even more) for every $100 of loan issued for a repayment period of 14 days. If you add the amount of interest to this, the actual cost of the loan becomes around $45 to $70 for 14 days and around $90 to $140

for 28 days for every $100 of payday loan. This way, if you borrow $500, you must expect to pay anywhere around $725 to $850 for 14-day period and around $950 to $1200 for 28-day period.

Check Affordability

Now that you have a good understanding of the actual cash advance fee, the next step is to find out whether you can afford to repay the loan in time. In fact, even before you start reviewing your affordability, you should sit back and determine if these extremely high cost loans make any financial sense for you. Don’t you really have any better, cheaper alternatives? It is true that payday loans are packaged very attractively, as they promise quick approval and instant access to money through a very simple application process. Payday lenders approve loan applications to almost everybody who has a job and a bank account. But, there is a reason why they do that; they do that to attract more customers so that they can make more profits. It is a known fact that most consumers decide to borrow cash advances on the basis of temptation, not on the basis of information or rationality. If you also feel tempted to borrow these loans despite knowing the extremely high cost associated with it, you should at least review your finances and determine whether you can practically afford to make timely repayment while meeting all other financial obligations. It is very important for you to keep in mind that the consequences of not paying a payday loan on its scheduled due date can be very harsh; most borrowers often get trapped into a vicious cycle of debt.

Review The Consequences Of Missing The Due Date

The cash advance fee takes an extremely high jump once you miss the due date. You will instantly be hit with an array of charges, such as fine for missing the due date, collection fee, NSF (non-sufficient fund) fee and others. The worst thing is that you are also charged interest at the same high rate for every single day of delay. If we continue with the above example, a one month of delay will cause you to repay around $1850 to $2400. Please note that this is the amount of money that you may have to repay for a meager $500 of payday loan that you borrow originally. Most lenders obviously do not afford it and the worse thing is that they again get tempted to borrow another higher cash advance or multiple payday loans to meet their financial obligations. If a $500 of payday cash advance can bring such a horrible financial picture for you, you can imagine what will happen if you have multiple payday loans of much higher amount.

Overall, if you review each and every aspect of cash advance fee associated with a payday loan honestly without listening to your impulses, you will always come to the single conclusion – payday loans must be avoided at all cost.

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