Rates & Fees
Every type of loan comes with interest and fees. Such a downer right? Unfortunately, it is the nature of an industry that depends on customers who often lack the financial stability to pay on time. Without the cushion that interest rates and fees provide lenders, they would never be able to reserve enough funds to stay in business. Interest rates and fees are supposed to prevent customers from extending the life of the loan. Those who pay back loans on time often avoid paying fees or much interest at all. However, if you do continuously miss due dates the cost of interest and fees could have a very negative effect on your checking account and credit score.
Payday loans have a higher interest rate than many types of loans due to the nature of the loan, and qualifying factors. Conventional loans have lower interest rates, but are also harder to get approved for. The online payday loan industry provides a credit line to those who have been turned away by conventional loan lenders, banks, credit card companies, etc. It is easy to get approved for a payday loan with less than pretty credit; therefore, online payday loan lenders have to protect themselves with interest rates and fees. If you pay your payday loan back on time, higher interest rates will not affect what you owe. The fee associated with cash advances is a one-time fee the borrower pays along with the amount of the cash loan. No one likes to pay interest or fees, but in order to have access to quick and easy cash, online payday loan lenders have to stay in business.