Cash Till Payday Loan: What Are The Usual Costs And Fees?
Payday loans come with quite a large number of fees and costs, and some of them are sometimes not openly disclosed by the loan store. While not claiming to show a full list, here are the main ones that you should take into account when singing a contract with a payday loan store.
Interest rates. Payday loan stores generally charge a lot more than regular bank loans. It is highly common that you run across a 15 to 30 percent interest rate on such a loan. Country regulations usually impose a maximum rate, to prevent abuse. In Canada, for example, interest rates are capped at 60%.
Broker’s fee. Sometimes the payday loan store is, in fact, an intermediary between the customer and a third party lender. While some of these services will take their commission from the original lender, it is not uncommon to bill the end user as well.
Collection fees. If you are unable to pay your loan on time, the payday loan store will contract a collection agency who will contact you to arrange payment details. While they may be open to negotiations about rescheduling the payments and lowering the penalties, they will charge you a collection fee. As a side note, you should know that these agencies can file negative reports to the credit bureau and can also take you to court if you refuse or are unable to pay the amount due.
Setup fee. Payday lenders usually charge first time customers a flat rate in the range of $15 - $30. Loan stores use this mainly as a tool of building customer fidelity – the end users are far more likely to use their service the next time they will need a payday loan, because they won’t be charged again.
Account administration fee. With each loan, you could be charged a flat rate that goes towards the lender’s administrative expenses. While some “loan sharks” charge obnoxiously high rates (like 30% of the amount or even higher), most fees are in the range of 5% or less.
Early repayment fee. If you pay the amount in full before the due date, some payday loan stores will charge a so called “early repayment fee”, which will be either a flat rate or a percentage of the amount that is not due at the date of repayment. Hence, it is sometimes cheaper to pay the installments with the corresponding interest as per the initial agreement than pay the whole amount early.
Renewal fee. If you cannot pay back on time, the lender will roll over the amount due to a new period of time and charge you this fee. It is either a flat rate or a percentage of the missed payment and is considered a penalty.
All these commissions and fees should be clearly stated, either in the contract or some other official document signed by the payday loan store. It is your right, as a customer, to be informed on all the costs of the loan.
| 
