How to keep low cost loans low cost
Keeping costs low is easy: just pay back on time
Mark your calendar with your loan repayment date to avoid extra fees.
Reading about payday loans can be confusing. Some organizations and publications talk about “high interest rates,” even though payday lenders don’t charge interest rates.
Short-term loans are actually low-cost loans, relatively speaking. Because payday lenders don’t charge interest rates, short-term loans often cost less in the long run than loans with lengthy terms that charge interest. They key is to pay back your payday loan on time. As long as you do this, your short-term loan will remain a low cost loan.
Interested in interest rates
Don’t believe me? Well, let’s look at it this way. I pay about $100 in interest on my credit card each month. So, I’ll be paying about $1,200 to my credit card company this year that doesn’t even go toward my principal balance. Of course, it took me a few years to build up such a high balance on my credit card, but now I’ll be stuck with it for who-knows-how-many years, and the full amount in interest I’ll end up paying will be astronomical.
The credit card companies will continue making money off of me for a long, long time because my minimum payments are less than 50 percent principal. The rest is interest. With payday loans, your minimum payment is your full loan amount plus lender’s fees. For instance, I had a friend who recently took out a short-term loan, and it cost him $17. On the day his loan was due, he paid back the full amount plus $17, and he was done with it. Sounds like a low cost loan to me.
Low cost loans keep it simple
Payday lenders charge one-time fees up front, not interest rates. You and your lender will agree to the full amount you’ll repay and the date before you even take out your loan. As long as you stick to your agreement, you’ll get a low cost loan that you won’t have to think about for more than a couple of weeks.
So, instead of charging you interest over a long term, payday lenders just lend you a smaller amount of cash when you need it and charge a one-time fee. If you get your low cost loans online, you can authorize your lender to withdraw your repayment amount from your bank account on your due date. That way you don’t need to worry about forgetting to pay back your loan and getting hit with late fees.
3 tips for keeping it low cost
If you default on your payday loan, the penalties can be pretty stiff. So here are some tips for making sure your low cost loan remains low cost.
- Don’t borrow more money than you need. Payday lenders’ fees are based on how much you borrow, so the less you borrow the lower your fees will be.
- Make sure you schedule your repayment date on or after your next paycheck.
- Only use payday loans for small, short-term expenses. If you need more money than you’ll be able to pay back in a couple of weeks, try a traditional lender.
You can APPLY ONLINE for a payday loan, be approved in minutes and have your cash in as little as two hours.
