While there is no set definition of a payday loan, it is usually a short-term, high-cost loan, generally, for $500 or less, that is typically due on your next payday. Depending on your Country rule, payday loans may be obtainable through storefront payday lenders or online also
Some common features of a payday loan:
- The loans are for little amount, and a lot of state set a boundary on payday loan dimension. $500 is a ordinary loan limit although limits variety above and below this amount.
- A payday loan is usually repaid in a single payment on the borrower’s next payday, or when income is received from another source such as a pension or Social Security. The owing day is characteristically two to four weeks from the day the loan was complete.
- To repay the loan, you generally write a post-dated check for the full balance, including fees, or you provide the lender with authorization to electronically debit the funds from your store, praise union, or prepaid card explanation. If you don’t repay the loan on or previous to the due date, the lender can cash the check or electronically withdraw money from your account.
- Your ability to repay the loan while meeting your other financial obligations is generally not considered by a payday lender.
- The loan proceeds may be provided to you by cash or check, electronically deposited into your account, or loaded on a prepaid debit card.
Other wonga loan features can vary. For example, payday loans are frequently prearranged to be paid off in single lump-sum payment. Some state laws permit lenders to “rollover” or “renew” a loan when it becomes due so that the consumer pays only the fees due and the lender extends the due date of the loan.
Cost of a payday loan
Many state laws set a maximum amount for payday loan fees ranging from $10 to $30 for every $100 borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to about 30 percent. In many states that permit payday lending, the cost of the loan, fees, and the maximum loan amount are capped.