Getting the cash when you need it through a payday loan may seem like a fast and easy process. The advertisements for payday loans will certainly want to make you believe that. They will tell you that payday loans are fast, easy and problem free way of getting money when you need it. Getting hundred dollars on a loan can be else easy as showing a recent copy of your payslip, a copy of your driver’s license and a blank check. What they do not reveal that on an average it takes a person to pay much more as free than the original amount they borrowed before they can pay off the loan. A recent study has revealed that on an average for a person who were was more than $300 on a payday loan is more than $700 only as interest.
The way the payday loans work is as follows.
There is take the example of a situation where a person needs to borrow hundred dollars hills the time he gets paid from his company. You write the payday lender a postdated check for the amount of the loan plus the fee. The fee is usually calculated as either a fixed percentage of the amount borrowed or a fixed sum of money on every dollar borrowed. For example the fee payable on a loan of hundred dollars could be 10% or could be $15 for every $100 that you borrow.
You write a postdated check to the lender and the lender will immediately give you the cash on deposit the money directly into your savings account. Then when the payday arrives which is the same day that your postdated check has been made out for, the lender will cash the cheque unless you extend the loan period by paying additional fee. Extending a payday loan is called rolling over the loan. You get charged additional fee every time you roll over the loan. This is how most of the payday lenders make their money because most of the people choose to extend their loan for more than one cycle.