Payday Loan Fees Cheaper Than Late and NSF Fees?
There are many people out there a little short on cash needing to pay a bill or two before their next payday
. They just need a short-term loan to carry them to their next payday. Enter the payday loan.
For those of you who are unfamiliar with payday loans, a payday loan is a short-term loan that is intended to cover a borrower's expenses until his or her next payday. The typical payday loan amount ranges from between $100 to $1,500.
There are typically fees associated with payday loans. The fees vary between lenders but are normally around $15 for every $100 borrowed. The fee may seem high but when compared to the alternatives, it can be a cheaper means to obtaining the greatly needed cash.
The following examples compare the cost of the payday loan versus the costs of the alternatives (costs expressed here as APRs for two-week terms {sourced from Wikipedia}):
$100 payday advance with $15 fee = 391% APR;
$100 bounced check with $48 NSF/merchant fees = 1,251% APR;
$100 credit card balance with $26 late fee = 678% APR;
$100 utility bill with $50 late/reconnect fees = 1,304% APR.
The $15 fee for the payday loan is less than the alternative fees ($48, $26 and $50). Also, the APR for the payday loan is lower than the alternatives.
Payday loans are not for everyone; however, payday loans are a great resource in certain situations. Payday loans can be a good tool for quickly and easily borrowing cash during an emergency. For example, you might use a payday lender for an immediate and temporary financial need such as a medical bill, car repair or other expenses due before your payday. Payday loans are helpful for people who don't have cash readily available and need it before their next payday. Because most payday loans do not require a credit check, they are easier for people with financial problems to obtain.
Payday Loan Fees Cheaper Than Late and NSF Fees?
By: P. Brett
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