What Are The Rates For A Typical Payday Loan

The interest rates charged by a typical payday loan office for a short term cash loan are usually substantially higher than conventional bank loans

. The reason for this is that banks require a credit check and they have much more stringent terms when lending money. Many of the fast cash payday loan offices simply lend money upon a signature which is a promise to repay and they also verify the fact that you do have a job and a checking account.

The checking account is used to gain electronic access by the loan company for the repayment of the loan. Be aware that any fees incurred or late penalties charged can also be withdrawn from the checking account. Usually the maximum amount of money which will be loaned on the so-called payday loans is $500 at a time. There are places that may land as much as $1000-$1500 at a time but they are not common. Upon the $500 loan, usually $550-$575 is required for repayment. As you can see, $50-$75 on the repayment of a $500 loan in just one month is an extremely high interest rate.

You may wonder if charging these five interest rates is legal. Although some states do have restrictions on such things, most states understand that the convenience and the risk involved by the loan company necessitates these high interest rates. Obviously these types of loans are not something that most consumers would want to take part in most of the time.

To find the best loan rates for one of these payday loan offices it's advisable to make some phone calls before entering the office itself. By the way, if making these phone calls one should find an office that is unwilling to give these types of details over the phone or insist that you come into the office before giving these out, it's advisable not to do business with that office. A legitimate payday loan office should be more than willing to provide you with all the details you request about the payment terms, the interest rates, and any other fees or penalties that could apply to the payday loan.

Also be sure and ask the loan officer if there are ways which could reduce the interest rates charged on the no credit check loan. For example, do they offer methods of securing collateral which may in fact reduce the interest rates and the risks significantly? Some offices offer the option of using an automobile title as collateral for the loan. In many cases, so long as there is equity in the car, the loan rates can be reduced significantly if this collateral is provided.

by: Leo Kingston

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