Although payday loans have characteristically high-interest rates, lenders may also charge other fees. Generally speaking, payday lenders charge $10 to $30 on every $100 borrowed, depending on the state’s lending laws and the maximum amount. Calculated on an Annual Percentage Rate basis, this could amount to 400% for a two-week loan.
Additional costs charged on a payday loan include:
Rollovers
If you miss a payment deadline and the state's payday lending laws permit a rollover, a payday lender may initiate one. This allows the lender to extend the due date of the loan. But the catch is that you pay only the fees due, and then you are charged another fee, but the original balance remains.
For example, you could pay a rollover fee of $15 for a $100 loan and another $15 when the extension is over, and you would still owe the original $100 borrowed. That equates to a $30 charge on a $100 for just four weeks.
Late Fees
Failure to meet your obligations on payments or activate a rollover before the expiration of the loan term may attract a late fee. Depending on the state's law, a lender may also charge a late fee for a returned check. Banks and credit unions also typically charge non-sufficient funds charge if your post-dated check bounces or electronic authorization does not go through due to a lack of funds in your account.
Prepaid Debit Card Costs
They are costs associated with loading your loan funds onto a debit card, fees for calling customer support, monthly maintenance costs, fees each time you use the card, and fees for calling customer service.
Origination Fees
Some lenders may charge origination fees, which is the cost of processing the loan. The legal limits for origination fees differ from state to state. In Oregon, for instance, the legal limits are a one-time 10% origination fee, up to a maxim of $30 for a new loan.
Take Note!
Before signing a loan agreement, it is important to read between the lines to help you see all of the fees and costs associated with the loan offer. This should give you a clearer idea of the total cost of the loan you are taking out. If you find a payday loan too expensive to afford, consider getting a personal loan, car title loan, or an installment loan, which are known for their comparatively lower interest rates.