What are the costs of a payday loan?
On average, for a two-week payday advance, a borrower will usually pay at least fifteen dollars for every $100 borrowed. However, you need to factor in the duration. For example, with such a short duration these payday loan fees are equal to paying roughly a 400% annual percentage rate (APR). So you need to be very careful in using a payday loan to pay for bills. Borrowers who renew their payday loans will often end up paying more in those fees than they have borrowed! Since the company that lends the payday loan is holding a “live check” as collateral, the borrowers may struggle to renew their payday loans every two weeks, and they very well may fall behind on other bills, like utility, rent, mortgage, electricity, and even groceries bills.
