Payday loans carry a very high cost. Generally, the lender fees for a $ 100 payday loan is anywhere between $15 and $25. It should be remembered that this fee is for 14 days as the loan itself is extended for these many days only.
If one considers the cost on an annual percentage rate (APR) basis, the average is 391%, which by any standard is exorbitant. By law, it is mandatory for the lender to specify the APR to the borrower. Many lenders do compare the cost of payday loans against other forms of financing, but the common denominator of such a comparison is that all of them are very expensive.
When to avail of payday loans?
Payday loans should be availed only during emergencies. Considering the fact that the cost of carrying a payday loan is very high, it should be a resource of last resort. If one implements good budgeting techniques and has a good financial plan, the need for borrowing by way of payday loans can be minimized.
Moreover, one must ensure that a payday loan is paid on time. Payday loans should not be rolled over or extended as within no time the borrower will find himself or herself in a debt trap where money may have to be borrowed just to repay the interest.
Profile of a payday loan borrower
A typical payday loan customer is between 25 and 40 years of age with an annual income anywhere between $ 25,000 and $ 50,000.
According to the US Census report of the Year 2000, the results of the payday loan borrowers survey are:
22% of those surveyed hold a bachelor’s degree.
51% of those surveyed have a retirement savings plan.
Over two-thirds of those surveyed have a savings account.
More than two-thirds of those surveyed have an annual income of at least $ 25,555.
We can get emergency fund with payday loan. We can be benefited in our bad time by payday loan. But Payday loan can be debt trap for some one. If you have caught by payday loan debt you can seek payday loan debt help from the online financial company. They can give best financial solution.