Quickly avail a $700 payday loan during an emergency
There are times when we need funds in a hurry, but do not have enough savings. These can be emergency situations such as medical bills, car breakdown, home appliance repair, or purchase of raw materials for your business, etc. In such situations payday loans can be of great help.
Payday loans do not require collateral but only evidence of a regular income source. The application process can be done online; it is simple and fast. The approval and disbursal of payday loans is also quick; often the funds get transferred to the borrower’s bank account on the same day itself.
Payday loans however come with high interest rates and fees. Hence, borrowers have to be careful when taking out such loans. You should ensure that you can repay the loan on time, else the additional interest and penalties can spike to over 350 percent in a year.
Discussed below are 3 scenarios of the interest and fees charged on a $700 payday loan over a term of 2 weeks, 3 months, and 8 months.
1. Repayment in 2 weeks
Most $700 payday loans come with a term of 2 weeks. The median interest cap on the interest on such loans is over 14 percent. Thus, the interest levied on the loan for the 2 week period is more than $100. There will also be additional administrative charges and other fees levied by the lender; this can be around 20 to 30 dollars. Thus, the total amount that a borrower of $700 payday loan needs to repay after two weeks is around $830. 130 dollars in interest and fees is a fair charge considering that you were able to get the $700 loan immediately during the emergency.
2. Repayment in 3 months
If the $700 payday loan is rolled over by borrowers over a three month period, then interest will be levied 6 times on it. This is because the term for payday loans is often restricted to the next paycheck date, which typically occurs in 2 weeks. With a median interest rate of 15 percent, borrowers will be repaying over $1300 to the payday loan lender by the end of 3 months. This amount is exclusive of fees and other penalties that the lender may add. Thus, you will be repaying nearly double the initial loan amount. This is the reason why many borrowers tend to get into a debt trap after taking a payday loan. It is therefore advisable that borrowers only opt for a loan sum that they can afford to repay on the next payday.
3. Repayment in 8 months
The average time taken by borrowers to repay their payday loans is around 8 months. This is the unfortunate, sad truth. With a 15 percent median interest rate, borrowers will end up paying nearly $1,700 in interest alone after 8 months. Then, there are the extra fees and late payment penalties.
Due to the high interest charges and added penalty fees, it is recommended that borrowers repay their $700 payday loan on the due date in 2 weeks. If you cannot repay it in two weeks, then repay at the earliest and avoid rolling over to 3 or 8 months.>