How to know the cost of your payday loan?
There is a requirement for payday lenders not to hide the fees including an
APR in order the borrowers are aware of the cost of the loan for the entire
year. You can hear from some people that payday loans have high interests to be
paid. Though this kind of a loan is a shortterm loan which is taken usually for
two weeks many people prefer the interest to a fee.
As a rule, about $15 is charged for every $100 that you borrowed. For example,
if you are going to take an amount of $100 payday loan for the period of 2 weeks
you will have a charge of $15. When you will count your APR taking into account
this $15 which is considered to be an interest on your payday loan the amount of
annual percentage rate will be up to 391%.
Which are the ways of calculating the cost of a loan?
We are going to show you the easy way of calculating how much your payday loan
will cost you. While calculating it you should take into account the total cost
per year as a percentage of the sum of money that you have borrowed.
— First step: First step is formulating the interest’s amount you are going
to pay. How to do this? You should find out what APR you will be charged for
your loan. Then you should divide this number by 365 which means the number of
days in a year. The figure that you are going to get will be your payday loan’s
interest rate per day. After that, multiply the figure that you have received by
the number of days in which you should pay your loan back. And one more
operation is multiplying this figure by the sum of money that you are going to
borrow.
— Second step: After previous operations your task is to define what amount
of fees your payday loan will have. After being aware of the whole amount of
fees that you are going to be charged, you must do the following operation: add
the figure that you got to the entire loan’s amount which was found above.
— Third step: Here you can find the method on how the annual cost can be
calculated. It is indicated as the total amount’s percent of your borrowing.
Perform the following operation: the total cost of your Payday Loans
Online (which we have already got with by calculating interest plus fees) must be divided by the
sum of your borrowing. The next step is taking this figure and dividing it by
the number of days that you should pay the payday loan back. And the final step
will be multiplying the figure that you got by 365 (which is the number of days
in a year).
How does an example of a payday loan cost calculation look like:
To make it easier to understand we have decided to provide you with the example.
For instance, our client wants to borrow a sum of $300. We will give 14 days for
you to be able to recompense your payday loan. The sum of your additional
interest and fees will be mentioned in your contract. You are going to be
charged an amount of $50. This is the method of knowing how much your payday
loan will cost you.
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