What to Look for in the Fine Print of a Payday Loan Agreement

When you borrow money from a payday lender, it’s crucial to read and fully understand the loan agreement. This document provides details on the due date, fees, interest rate and repayment options associated with the debt. Most payday loans come with fine print that contains at least eight meaningful stipulations.

Common Terms

APR: The annual percentage rate reveals the equivalent yearly interest rate for a short-term debt. For example, a 14-day loan with 15 percent interest has an APR of 390 percent. Someone who borrows $300 at this rate would have to pay a $45 finance charge.

Default: The fine print includes details on the actions that a lender can take if you fail to repay a loan. You might find these facts in a section about “consequences” or “lender’s rights.” The repercussions may include extra fees, legal action and negative credit reports.

Due date: Lending agreements specify the exact dates when borrowers must repay their payday loans. A lender may refund a portion of the interest if you pay off a loan early. Likewise, additional fees and finance charges will apply when a payment is late.

NSF fee: Most agreements give lenders the power to charge extra fees when they can’t deposit borrowers’ post-dated checks. This may occur when a bank account has been closed or contains too little money. Some lending contracts call this charge a “non-sufficient funds” fee.

Origination fee: Many lenders impose separate origination and interest charges. The origination fee compensates the company for setting up a loan. Unlike interest, it is usually not refundable. This means that you won’t recover any portion of this fee if you repay the loan early.

Payment methods: This section explains that the lender can deposit your post-dated check on the due date or accept an early payment. It may list suitable repayment options, such as money orders and cash. A payday lender should return your check if you pay off the loan early.

Privacy policy: Some agreements provide various facts on the lender’s handling of personal data. Refer to this section to learn how the firm collects, stores and distributes details about you. There may be an option to prohibit them from releasing this data to other companies.

Total payments: The fine print should include specific details on the total fees, interest and principal that you must pay. It might call the interest a “finance charge.” Keep in mind that these numbers may increase dramatically if you ask for more time to pay off a loan.

Exercising Caution
Every payday lender uses slightly different fine print, so it’s important to watch out for unexpected fees or restrictions. Don’t sign an agreement that requires you to give up your legal rights. If you can’t understand part of the contract, take the time to conduct further research or ask a lawyer for clarification.
Remember that the fine print on payday loans will supersede anything that the lender’s employees may tell you. Finally, always be sure to keep a copy of each agreement that you sign.

Author Bio:

James is working as a freelancer content provider and has created tonnes of articles regarding payday loans and forex finance, This post is with reference to
http://www.paydayloansguide.org and https://www.northcash.com/.