Search thousands of topics on CostHelper.com

BROWSE ALL TOPICS >> appliances babies & children  cars  consumer electronics health & personal care home & garden personal finance  pets  schools small business weddings
CostHelper > Personal Finance  > Taxes & Financial Planning > Payday Loan

Payday Loan Cost


How Much Does a Payday Loan Cost?

 
average costAverage Payday Loan Fees: $15-$30 per $100high costAnnual Percentage Rate: 300%-500%+
post E-mail post Post  

Also called a paycheck advance, a payday loan lets an employed person borrow a relatively small amount of cash for a short period of time (typically two weeks), to cover expenses until the next payday. The Federal Trade Commission has issued a consumer alert[1] calling payday loans "very costly cash" and suggesting alternatives.

Typical costs:

  • Amounts borrowed vary from $100-$1,500, but most payday loans are for $100-$500. Fees are typically $15-$30 per $100 borrowed (or 15%-30%, if the payday loan company charges interest rather than flat fees).
  • For example, to borrow $300 with a fee of $15 per $100, the borrower writes a personal check for $345 (the amount of the loan plus the fee) and receives $300 in cash. The payday lender holds the check until an agreed-upon date, typically up to two weeks. On that date either the borrower gives the lender $345 in cash and gets the personal check back, or the lender deposits the check its checking account and the money is taken out of the borrower's checking account. In some cases the money is transferred electronically by the lender, rather than depositing a paper check. Whichever way it's done, the loan and fee are paid in full.
  • However, a borrower who isn't able to repay the entire amount of loan and fee can choose to pay another $45 fee to "roll over" the personal check for an additional two weeks. If it's difficult to pay off the entire loan, fees for extending the loan every two weeks add up quickly.
  • Because state laws vary, payday lending fees are different in each state. For example, Check Into Cash charges $10 per $100 borrowed in Oregon; $17.50 per $100 in California and Alabama; $20 in Colorado; $24 in Nevada; and $30 per $100 in Delaware.
Related articles: Line of Credit, Credit Card, Credit Report

What should be included:
  • Payday loans are fast (typically approved in one or a few hours, and almost all go through within 24 hours) and relatively easy to obtain. No credit check or collateral is required, and the loan amounts are usually far smaller than those typically available through banks, credit unions or other lenders. Usually the borrower needs to show a photo ID and proof of employment or income (pay stubs and/or bank statements), and must have a personal checking account. Payday lenders rarely turn down an applicant who a job, ID and checking account.
  • Many payday lenders offer loans online, 24 hours a day, with supporting documents faxed to the lending company. The loan amount is transferred by a direct deposit into the borrower's checking account and on the due date the loan and fee amount are withdrawn electronically.
  • Payday loans are for such short periods of time that many borrowers are not able to repay the debt and must roll it forward. Annual percentage rates on these loans work out to 300%-500% or more, and payday loans can be a short-term solution to what may be long-term financial problems, Consumer advocates allege that a few payday loan companies have used unscrupulous, unethical and even illegal means to collect unpaid loan amounts.
  • The Center for Responsible Lending charges that payday loans lock borrowers into a debt trap[2] . The center provides an example[3] of a consumer who borrows $300 with a $50 fee and rolls the loan forward nine times (the average per year per borrower), paying $450 in fees while still owing the original $300 loan amount. However, the Community Financial Services Association, a trade organization that represents the interests of the payday lending companies, asserts that such charges are myths.
  • Payday loans or paycheck advances are illegal in some states, and other states limit the maximum loan amount. Credit.com summarizes payday loan regulations[4] by state.
Additional costs:
  • If a borrower doesn't have enough money in his or her checking account when the lender deposits the personal check, the borrower will be charged bounced check fees (typically $20-$40 per check) by the bank and by the payday lending company.
Shopping for a payday loan:
  • Payday loan and paycheck advance companies advertise heavily in all media -- radio, television and online. If a payday loan appears to be the best way to cope with unexpected expenses, Community Financial Services Association of America[5] , the payday lending organization, suggests choosing a lender who follows its code of best lending practices[6] .
  • The Consumer Federation of America offers consumer help[7] , suggesting ways to cope with a cash-flow gap[8] without borrowing.
post E-mail post Post  
CostHelper News


3 Ways to Have the Government Pay You Back for Your Energy Efficient Upgrades
Any renovations or upgrades made to your home this year that included energy-efficient appliances could be eligible for some federal energy tax credits. But it's not just appliances. || Posted December 9 2013


7 Lesser-Known Discounts for the 50+ Crowd
As they age, members of the Baby Boomer generation don't like to admit that they're senior citizens, but they love getting discounts. It's kind of a quandary, because some of the best deals available are reduced prices for older folks. || Posted October 21 2013

‣ All CostHelper Blog Posts


What People Are Paying - Recent Comments


 

Comment On Your Experience With a Payday Loan
 
Subject:  *
Amount Spent:  *
Total Amount Borrowed: Total Amount Spent: 
Lending Company:   
Comments: 
Purchased:  Year: 
City:  * State:  *
 
Information about you:
Email:  * Email addresses are not displayed.
Name:  This is the name we'll display with your post.
me on this computer
*=required field.
 



External Resources:
  1.  www.consumer.ftc.gov/articles/0097-payday-loans
  2.  www.responsiblelending.org/payday-lending/tools-resources/debttrap.html
  3.  www.responsiblelending.org/payday-lending/
  4.  www.credit.com/credit_information/credit_law/PaydayLoanLaws.jsp
  5.  cfsaa.com/about-cfsa.aspx
  6.  cfsaa.com/cfsa-member-best-practices.aspx
  7.  www.paydayloaninfo.org/consumer-help
  8.  www.paydayloaninfo.org/consumer-help#3
More Personal Finance Topics
Check Out All Costs for Personal Finance How Much Do Tax Returns Cost? How Much Does Closing a Home Cost? How Much Does a Traffic Ticket Attorney Cost?

Search Thousands of Topics on CostHelper.com



Today's Featured Cost Articles

About CostHelper
CostHelper is based in Silicon Valley and provides consumers with unbiased price information about thousands of goods and services. Our writers are experienced journalists who adhere to our strict editorial ethics policy.

CostHelper Community
Brazillian Knot
Paid: 275.00
I tried brazillian knot for the first time and it hurt soooo bad!!!! Never Again!!! I had to cut them out right away. I kept them in for 2 days and then that was it, I could not take it... [more]
-annejevas2
Hair Extensions Cost
Sleep Study
Paid: 6400.00
Wow what a rip off will never go to that hospital again. I will go shopping for my next procedure... [more]
-
Sleep Apnea Treatment Cost
Cost of a deck
Paid: 5000.00
I was wondering if I paid to much for my 10X25 rectangle deck with treated wood? It has 3 stairs about 3 feet in width and 25 feet of railings... [more]
-LB
Deck Cost
Rabbit costs
Paid: 10.00
The dwarf cross, Sunday(male, neutered) was a CL freebie. Womans cat brought 2 approx 3-4 wk old babies, dont know where mother was. He was soooo tiny, dehydrated, & a bit cold... [more]
-shawnna Stone
Rabbit Cost
MRI FH Outpatient/CT FH Outpatient
Paid: 319.80
MRI Amount billed by hospital $9025.82!!!!!January 2014CT FH- outpatient - billed $5146... [more]
-Janie D
MRI Cost
Is my pricing high?
Paid: 1400.00
Just saw the dentist today. Informed I am in need of two extractions and two bone graphs. My insurance does not cover bone grafts... [more]
-
Dental Bone Graft Cost