Payday Loans Come With Unreasonably High Interest Rates
MYTH #1Irrationally high interest rates are charged on cash advances |
FACTOnly a flat fee is charged on cash advances, while most loans have fees which accrue interest |
Generally, you can expect a fee of $15 for each $100 borrowed in a cash advance. When compared to the costs of a bounced check or missed credit card payment, most customers prefer the less expensive one-time fee.
All financial institutions must report their loan fees as APR (Annual Percentage Rates), as required by the Federal Truth in Lending Act (TILA). While the average loan term is less than one month, we report to you the implied APR of a cash advance, if you continued to renew it every two weeks for an entire year. While APR is more usually used for long-term loans, you can still see that a cash advance is cheaper than many other alternatives.
