How to Quickly Get $700 Payday Loan During an Emergency!
Many of us are not aware about how payday loans work. Jennifer from Orlando, Florida has this question to ask:
I am aware of the fact that I will not get the entire $700 when I take out a $700 payday loan. I also know that the loan may come with varied fees and high interest charges. What I what to know is the total overall cost of borrowing a $700 payday loan. Jennifer, Orlando, FL
It is important to remember that a borrower will not get the entire amount of 700 dollars when he/she applies and gets approved for a $700 payday loan. The $700 is regarded as the principal which the lenders use as a measure to determine the cost, interest charges, and other fees. Certain charges get deducted at source and the remaining amount is deposited into the bank account of the borrower. Thus, in the case of a $700 payday loan, the borrower may receive 640 to 660 dollars.
Presented below is an explanation of the total costs that a borrower may have to bear when he takes out a $700 payday loan and repays it entirely on the first paycheck, or within 3 months, or within 8 months. It may be noted that as per a few studies, most borrowers tend to repay a 700 dollar loan in 8 months on an average.
- In the first case scenario, wherein a borrower pays back the full loan on the next paycheck, he/she may have to bear an interest rate of 10 to 15 percent minimum (which is equal to 70 to 105 dollars) and additional fees of 20 to 25 dollars. Thus, in total the borrower will have to repay 790 to 830 dollars for the $700 payday loan.
- The second case involves a borrower repaying the loan in 3 months. It may be noted that interest charges are generally applicable every two weeks for payday loans. Thus, interest rate of 10 to 15 percent will be levied 6 times in this instance. Thus, the borrower will be paying 70 to 105 dollars 6 times which results in a total interest of 420 to 630 dollars. Thus, principal plus interest charges total to 1120 to 1330 dollars. Adding 20 to 25 dollars in fees to this amount means that a borrower will repay 1140 to 1355 dollars in total to the lender during the 3 months. This is nearly double the amount that is taken as loan by the borrower. Such debt can be really hard to pay off and hence a lot of borrowers end up in a debt spiral.
- In the third case where repayment is made in 8 months, the interest rate of 10 to 15 percent is levied 16 times. This totals to 1120 to 1680 dollars in interest alone! After 8 months, borrowers will have repaid 1840 to 2405 dollars in total for a $700 payday loan.
It may be noted that in all the above scenarios, late payment charges have not been included. If a borrower does not repay on time then penalty charges of 1 to 3 percent is levied every day of paycheck. This will get added to the overall cost of taking out a $700 payday loan.
Payday loans are a good source of funds during emergencies. It is recommended to borrow payday loans only when needed and to repay it on time, at the earliest, to keep the costs of borrowing to a minimum.