Payday Loan Cost

Payday loans are expensive period. In fact payday loans are the most expensive type of credit you can get. Let’s have a look at the various service fees, charges and interest you will be paying if you get a payday loan. The payday loan interest is charged from the first day of the payday loan until you repay the loan, including all other fees that the payday loan lender charges. The maximum yearly interest that payday loan lender can charge you in Canada is 60%. Because the interest is limited to 60% per year, lenders charge various service fees, to increase the total amount you have to repay them back.

You might be charged a setup fee by some payday loan lenders, if you are dealing with them for a first time. The cost of the setup fee can is usually between $10 CAD and $20 CAD. Then come the administrative fee, verification fee and processing fee, which usually cost between 10% and 35% of the amount of money you are borrowing. For example if you are borrowing $500, expect to pay between $50 and $175 in fees for a 2 week period. If you repay the loan earlier than the maturity date, the lender might charge you early repayment fee. A non-sufficient funds fee will be charged if you don't have enough funds in your bank account to cover the post-dated cheque you wrote to the lender when you took the payday loan. The same fee will be charged if the lender tries to do a direct withdrawal from your bank account and you don't have enough funds to cover it.

The payday loan fees that we described above are by no means all fees charged by payday lenders, so make sure that you read the payday loan contract carefully and that you understand all the fees that the payday loan involves.