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Payday Cash Advance – Understand The Fees
By: Carrie Reeder
Cash advance loan fees can be somewhat difficult to understand at first. First
you will be given an APR rate for the year, but cash advance loan terms are only
for 1 to 30 days. Then you have fees that are separate from the interest rates.
All of it can seem confusing unless you understand the purpose of each figure
and how to compare them.
The Purpose Of APR
The APR (annual percentage rate) includes interest and fees paid over a year for
the loan amount. In an effort to educate consumers on the long term cost of such
loans and to provide an easy way to compare lenders’ fees, the APR is required
to be posted by the US government.
This makes researching rates easy. Simply look for the lowest percent. If you
can’t find the rate on a lender’s site, then request it before applying. If you
still don’t receive an answer, skip the lender since they appear to be a shady
lender.
However, while an APR helps you compare cash advance companies, they don’t tell
you the real cost of the loan. Most consumers only take a cash advance until
payday, usually less than 17 days. So to understand your loan’s cost, you need
to look at both rates and fees.
Cash Advance Fees And Interest Rates
Fees and interest rates are usually stated up front by cash advance companies.
There might be an application or processing fee, just like with any typical
loan.
To know the actual percent the fees will be, simply divide the total amount due
on your next payday by the fee, which also includes interest. For example, the
cost of a $100 loan might by $20 dollars. By dividing 20 by 100 (20/100) you get
.20, which is 20%. A very different number than the APR.
Fees Out Of Hand
Fees can get out of hand if you don’t pay back your cash advance on your next
payday. In addition to your interest rate charges, you will also incur late
fees. If you need money for a longer period, it is better to use a credit card
or other form of credit.
About the Author:
See my recommended Cheap Cash Advance Loan companies online. Carrie Reeder is
the owner of ABC Loan Guide, which offers help with loans for people with bad
credit.
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