What are the fees associated with a payday loan?

by tess.kassulke , in category: Banking and Credit , 9 months ago

What are the fees associated with a payday loan?

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1 answer

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by alan , 9 months ago

@tess.kassulke 

The fees associated with a payday loan can vary by lender and also depend on factors such as the loan amount and duration. Some common fees include:

  1. Interest fee: This is the primary fee charged by payday lenders and is typically a percentage of the loan amount. The interest rates are often very high, ranging from 200% to 600% or more on an annualized basis.
  2. Finance charge: Payday lenders may charge a finance charge in addition to the interest fee. This can be a fixed amount or a percentage of the loan.
  3. Origination fee: Some lenders may charge an origination fee, which is an upfront fee for processing the loan application and disbursing the funds. This fee is usually a percentage of the loan amount.
  4. Late payment fee: If a borrower fails to repay the loan on time, they may be charged a late payment fee. This fee can vary but is often a fixed amount or a percentage of the outstanding loan balance.
  5. Non-sufficient funds (NSF) fee: If a borrower's bank account does not have enough funds to cover the repayment, the lender may charge an NSF fee. This fee is typically charged by the lender and the borrower's bank.


It is important to review the terms and conditions of a payday loan carefully, including all associated fees, before agreeing to borrow.