Payday loans not covered by promotional repayment terms are more expensive than loans. There may be different types of costs for such loans, and the interest rate and commission for processing the application is only an introduction to all costs. Before signing the contract, be sure to read the table of commissions and fees, because one day late with repayment is enough and additional fees are charged, e.g. for a text message with notification.
List of additional fees for payday loans
The lender may charge additional fees, for example for starting financing or preparing a new repayment schedule . You always have to take into account the fee for extending the repayment deadline (it is not always possible), as well as for sending reminders (traditional mail, sms or email) or phone notifications. If you do not settle your debt on time, the costs will be increased by penalty interest – the longer the delay lasts, the higher it will be.
When analyzing the terms of the payday loan offer, pay special attention to its basic costs and any additional fees, because they often clearly increase the total cost of a quick loan.
Why payday loans have such high APRC?
One of the most reliable indicators used to assess the attractiveness of individual loans and advances is the APRC, i.e. the Actual Annual Interest Rate. Thanks to it, you can find out the percentage of total costs of using a given product and refer them to competing proposals.
In the case of mortgage loans, the APRC amount is usually from a few to several percent, and cash – up to several dozen. As for the payday loans, it can reach from several hundred to even over a thousand percent. Contrary to appearances, this does not mean, however, that such loans are extremely unprofitable. The APRC is a sensitive parameter, among others, to the amount or duration of the commitment, and in addition created to compare the cost of bank loans. The basic APRC of payday loans is due to their basic features, i.e. short repayment dates and low financing amounts.
Important payday parameter – the total repayment amount
When considering the attractiveness of the payday loan offer, pay attention not only to its APRC, but also to the total amount to be repaid. In this case, you will avoid interpretation difficulties and easily assess how much the loan will actually cost you. Obtaining such information will not have a problem because most lenders place calculators on their pages, thanks to which you can check how the cost of the loan changes with selected parameters, i.e. the amount and duration of the commitment. Also remember that the loan institution is obliged to provide you with all information about the product, including the total repayment amount. If something is unclear you can ask the lender consultant to dispel doubts.