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Payday Loan Interest Rates, Charges & Fees

Let’s find out more about the true rates, charges and why.

Get a quick estimate for loan
How much cash?
How long for?
Loan length:
APR:
Interest:
Pay by:
16 Days
728.9%
$7.72
23.1.2014
Total repayment:
$107.72

What Are The Interest Rates For Payday Loans?

The interest rates for payday loansare not fixed and they do vary from one lender to another

That said, there’s a standard structure that most lenders use while offering payday loans. Once you receive a payday loan, you will have the following to pay back, in addition to the original loan amount (principal sum).

It must be noted that the loan term is always rounded up to the next month when calculating the interest.

Are payday loan interest rates same as the ones offered by banks?

No. Payday loan interest rates are higher to a certain degree than the ones offered by banks for regular loans.

And, why is that?

In terms of interest rates, payday loans are costlier than personal loans or bank loans because you can get a payday loan when you really need it the most – quickly and without lengthy paperwork. The higher interest rates are partly due to this easy access to a loan.

Is there a quick way to calculate how much interest I would be paying?

Yes.

When you visit our home page, you can locate a term interest calculator. By putting in relevant numbers, you can get an idea about how much interest you will be paying.

Are there any fines/penalties for defaulters?

Yes.

Defaulting on a payday loan repayment may not be the wisest of ideas as you may have to confront high default fees, dishonour fees and daily penalties. These fees are different for different lenders and are mentioned clearly in concerned payday loan application forms.

Are there any other charges or hidden fees I need to know about?

Other charges usually include government fees (including taxes), service charges (lender specific) and enforcement fees (only applicable if the lender is required to pursue legal options for the recovery of loaned sum).

It is strongly advised that you learn about all the charges associated with a payday loan, before filing in a form.

The interest rate listed on my lender’s website and the one mentioned on my loan agreement/contract of credit are different. Why?

This is because all lenders are required by law to use an annual percentage rate (APR, for 365 days) while drawing up contracts of credit. The interest rate mentioned on most lenders’ websites is a net interest rate over the loan term (14 to 30 days).Therefore, you may see a higher rate of interest on your contract of credit.

What are various late fees/fines for payday loans?

Late fees typically vary from one lender to another. Many lenders, however, charge $40 (or thereabouts) in late fees per instance. This means that regardless of the amount lent, late fees for every instance (dishonoured payments or missed payments) will be $40 (or thereabouts).

Issuance of a default letter or collection letter will cost you extra $10, as well.

Please note that late fees mentioned here are representative. Always verify the same with the lender before signing up for a payday loan.

What is a dishonoured payment/dishonoured debit?

Most payday lenders will ask you to authorize automatic withdrawal of money from your bank account to theirs on the pre-established due date. On the given due date, if your bank account doesn’t have sufficient funds to complete this transaction, it will be termed as a dishonoured payment or dishonoured debit.

Cheques that get bounced because of lack of funds are also classified as dishonoured payments.

Dishonoured payments attract extra fees and can affect your credit score negatively.

What is a missed payment?

Missed payment is simply a payment that gets delayed. If you have chosen to repay via methods other than automatic bank withdrawal/cheques and you don’t repay an instalment/term amount on or before the given due date, it will be labelled as a missed payment.

Missed payments attract extra fees and can affect your credit score negatively.

How does a credit card compare to a payday loan?

There’s a fundamental difference between a credit and a loan. A credit gives one ability to borrow, while a loan is actually the act of borrowing.

In terms of interest rates, however, there’s little to separate a credit card and a payday loan. Interest rates for most major credit cards are around 20% mark. The only difference lies in the fact that credit card interest is billed annually, while payday loan interest is billed either monthly, or over a set term.

How does a personal loan compare to a payday loan?

Personal loans are usually charged interest rates within a range of 10% to 16%. These are strictly lender specific and hence, cannot be, as such, compared to payday loans. Personal loans can be more flexible while payday loans can be more accessible.

Payday loans

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