Fees for cash advance loans can be hard to figure out at first. First, you'll get an APR for the year, but the terms of a cash advance loan are only 1 to 30 days. Then there are fees, which are not the same as interest rates. All of this can be hard to understand if you don't know what each figure is for and how to compare them.
The Reason for APR
The APR, or annual percentage rate, is the total amount of interest and fees paid on a loan over a year. The APR must be posted by the US government so that people can learn how much these loans will cost in the long run and so that it is easy to compare the fees of different lenders.
This makes it easy to look up rates. Just look for the percent that is the lowest. If the rate isn't listed on a lender's website, you should ask for it before you apply. If you still don't hear back from the lender, skip them because they seem like a sketchy lender.
APRs help you compare cash advance companies, but they don't tell you how much the loan will really cost. Most people only get a cash advance until their next paycheck, which is usually less than 17 days away. So, you need to look at both rates and fees to figure out how much your loan will cost.
Costs and rates for cash advances
Cash advance companies usually tell you up front about their fees and interest rates. Like with any other loan, there may be an application or processing fee.
To figure out the exact percentage, divide the total amount you owe on your next payday by the fee, which includes interest. For instance, the cost of a $100 loan could be $20. By dividing 20 by 100 (20/100) you get . 20, which is equal to 20%. A number that is very different from the APR.
Fees Out Of Hand
If you don't pay back your cash advance on your next payday, the fees can get out of hand. You will also have to pay late fees on top of the interest rate charges. If you need money for a longer time, it's better to use a credit card or another form of credit.
