What costs and fees could I expect with a payday loan?
Answer: Payday loans generally charge a fixed fee on the amount you borrow. This fee may range from $10 to $30 for every $100 borrowed, depending on the lender and the maximum amount your state permits.
A fee of $15 per $100 is typical, which equates to an annual percentage rate of almost 400% for a two-week loan. So, if you need to borrow $300 before your next payday, it would cost you $345 to pay it back, assuming a fee of $15 per $100.
If you renew or roll over your loan, you will be charged another fee and still owe the entire original balance. For example, if you pay a fee renewal or rollover fee of $45 you would still owe the original $300 loan and another $45 fee when the extension is over. That’s a $90 charge for borrowing $300 for just a few weeks.
In addition, if you don’t repay the loan on time, the lender might charge a late or returned check fee, depending on state law.
If your loan funds are loaded onto a prepaid debit card, there might be other fees you should take into consideration, such as fees to add the money to the card, fees for checking your balance or calling customer service, fees each time you use the card and/or regular monthly fees.
Be sure to read the loan agreement carefully to spot other fees and costs before you take out a loan.