Payday Loans – The ads are on radio, television, Internet and in the mail. They refer to payday loans which are granted to a very high price. Check cashing companies, finance companies and other loan amounts are small, short-term and high rates that have a variety of names: payday loans, cash advance loans cash loans or loans dated checks deferred deposit check.
Generally, the consumer makes a personal check payable to the lender for the amount you want to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Charges for payday loans are usually a percentage of the nominal value of the check or fee charged per amount borrowed
For example, for every $ 50 or $ 100 borrowed. And if you extend or roll-over the loan say for another two weeks you will pay the fees for each extension.
Under the federal Truth in Lending Act, which deals with the transparency of loans, the cost of payday loans like other types of credit must be disclosed. Among the information that you should receive, in writing, the finance charge (dollar amount) and the APR (annual percentage rate, APR initials in English) which is the cost of credit on a yearly basis.
An advance loan of cash secured by a personal check as the case of a payday loan is very expensive credit. Say you write a personal check for $ 115 to borrow $ 100 for a period of 14 days. The check casher or payday lender agrees to hold the check until the next payment date. At that time, depending on the particular plan, the lender deposits the check, or you redeem the check by paying $ 115 in cash or roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a finance charge of $ 15 to 391 percent APR. If you roll over the loan three times, the fee increases to $ 60 to borrow $ 100.