Again About Payday Loans

October 3, 2009 · Posted in Loan

about-payday-loans Payday Loans – The ads are on the radio, television, Internet and even in the mail. They refer to payday loans payday which are given to a very high price. Companies Check cashes, finance companies and other loan amounts are small, short-term, high rates with a variety of names: payday loans, cash advance loans cash loans or loans dated checks deferred deposit check. The consumer makes a personal check payable to the lender for the amount you wish to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. The charges for payday loans are usually a percentage of the nominal value of the check or a fee charged per amount borrowed, for example, for every $50 or $100 borrowed. If you extend or roll-over the loan for another two weeks you will pay the charges for each extension.

Under the federal Truth in Lending Act, which deals with the transparency of the loans, the cost of payday loans like other types of credit must be disclosed. Among the information that you must receive, in writing, the finance charge and the APR is the cost of credit on a yearly basis. A cash advance loan secured by cash a personal check as the case of a payday loan is very expensive credit. Let’s say you write a personal check for $115 to borrow $100 for a period of 14 days. The check cashes or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying $115 in cash or roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll over the loan three times, the fee increases to $60 to borrow $100.

Tweet This Post Delicious This Post Digg This Post Facebook MySpace Stumble This Post