A payday loan is a short-term and heavy high-cost loan!
A payday loan is a short-term, high-cost loan typically for $500 or less. The loan is usually due on the borrower’s next payday and is repaid in a single payment.
Depending on the state, payday loans may be obtained through storefront lenders or online. The loan is repaid by writing a post-dated check or giving the lender authorization to withdraw funds electronically.
The lender’s assessment of the borrower’s ability to repay the loan while meeting other financial obligations is not typically considered. The loan may be provided in cash, check, or deposited electronically.
Some states allow for renewals or rollovers of the loan.
Renewing or rolling over a payday loan refers to the practice of extending the loan term by paying a fee, rather than paying off the loan in full on its due date.
This option may be offered by some payday lenders, but it is limited or prohibited in some states.
By renewing or rolling over the loan, the borrower is only paying the fee and not reducing the principal amount they owe. This can lead to a cycle of paying high fees and still owing the original amount borrowed.
Renewing or rolling over a payday loan means extending the repayment period by paying a fee, rather than paying off the loan in full on its due date.
This fee does not reduce the amount of the loan, and it will continue to accrue interest and fees. Some lenders offer this option, but it may be restricted or prohibited in certain states.
- When you renew or rollover a loan, you are essentially paying a fee to postpone repaying the loan. For example, if you borrowed $$$ and owe $$$ in 14 days, which includes $$ in fees.
- If you rollover the loan, you will only pay the $$ fee, but still owe the $$$ plus another $$ fee in 14 days. This means, the original $$$ loan will cost $$X2 in fees due to rollover.
- If you rollover the loan multiple times, you may end up paying several hundred dollars in fees, while still owing the original amount borrowed.
If you are having trouble repaying your payday loan, it’s best to seek alternative options and avoid rolling over the loan as it can lead to a cycle of debt.
Additionally, rolling over the loan multiple times can result in paying hundreds of dollars in fees.
If you are having difficulty paying off your payday loan, it is advisable to seek alternative solutions such as debt consolidation or financial counseling.