Payday Loans by the Numbers

Even a 500 dollar payday loan can be expensive. Everyone knows that, but exactly how expensive, and is it worth it? Whether or not it’s worth it is up to you. However, a study done by an independent consumer reporting service reported these numbers:

Average rates for varying lengths of payday loans:

-a 1 week payday loan: 911%
- a 2 week payday loan: 456%
- a one month payday loan: 212%

Those numbers almost make you gasp. However, it is important to understand that these percentage rates are compounded annually. Meaning that you will not be paying $9,110 dollars on a $1000 loan. However, the rate is still steep.

In addition to the interest rates you will also be charged an origination fee that averages around 17%.

This can seem steep. However, paying it off is relatively painless. These type of loans were meant to be short term. As a result, you don’t make payments and watch interest accrue. Usually you write one post dated check when you take out the loan to cover the loan, interest and fees.

It is also important to note that for better or worse payday loans do affect your credit score. It may seem counter-intuitive since these type of institutions do not run a credit check. However, they do report to a major credit bureau. They will report the loan and how you paid it off. Therefore, it is important not to blow of the loan. Not only will the payday loan place hunt you down, it will make your credit worse in the future. On the flip side, paying it off can actually improve your credit score. This can actually help you so that you don’t have to use these type of institutions in the future.

It is ridiculously easy to find a place that issues payday loans. All it takes is a quick google search for something like 1000 loan payday and you’re on your way.

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