Avoid Hassles of Cash Advance Payday Loans by Repaying the Amount by Due Date

Payday loans work the best for those in cash crunch. Only a person who is in great need of money avails payday loans because nobody wants to lose even a single penny to anyone and payday loans levy a huge rate of interest rate. The mechanism of fast payday loans is very simple. A check for the amount borrowed and the interest fee is given to the lender by the borrower. The lender then issues the amount in cash and keeps the check. On the next payday the borrower has to pay the whole amount in cash inclusive of the amount borrowed and the interest rate levied.

The cash advance payday loans are very costly. The borrower has to pay a lot even if he borrows the amount only for a week or until he gets the next pay check. Let us take an example. Suppose $ 1000 is borrowed for a period of say three weeks and the fee is $150. The borrower has to give the lender a check for $1150. The check is kept by the lender and he gives the borrower $1000 in cash. After three weeks, the borrower gives the lender $1150 and takes his check back from the lender. Thus, the borrower had to pay $150 in order to borrow an amount of $1000 for three weeks.

When the interest rate of the no fax payday loans is compared with the bank or credit union, it is considerably very large. APR or Annual Percentage Rate is the interest fee. This APR on payday loans is extremely high. The lender informs about the APR and the cost of the total loan including the loan amount to maintain transparency. The Apr is based on the amount of money borrowed, the monthly finance charge or the interest rate, how much the fee is paid and for how long the money is borrowed. The APR for payday loans when compared with that of the bank is found to be nearly 400%. If the borrower fails to pay the amount plus the fee by due date the loan is rolled over. Another fee is paid to roll over the loan and the amount borrowed remains there. If this process is repeated a few times, the borrower eventually ends up paying an amount which is much more than the amount actually borrowed. So, it is advisable to repay the payday loan by due date.