On an assumed loan amount of £750 over 12 months. Rate of interest 292% (fixed). Representative 171%APR. Total repayment amount £1351.20 and total interest is £601.20. 12 monthly payment of £112.60.
A payday loan online will always come with a representative example to give you an idea of how much the loan will cost and the monthly repayments to expect.
By showing a ‘representative APR,’ it is important to know that this is the rate that is offered to only 51% of successful applicants, hence it is a representative example. Therefore, the rate and cost of a payday loan may in fact be higher or lower depending on other factors such as credit score, affordability, loan duration and more.
Yes, late fees will apply if you have not made your monthly repayment on time. Lenders can charge a maximum default fee of £15 according to FCA regulation and they cannot charge any late fees higher than this. In addition to a late fee, you can be charged daily interest (maximum of 0.8%) for every day that your loan remains unpaid or outstanding.
If you know that you are going to struggle to make an upcoming payment, it is essential to get in touch with your lender and make them aware. Very often, they will be able to reduce the payment amount or give you an extension which will reduce any late fees and keep your credit score intact.
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One of the simplest ways to save money on your payday loan is to repay your loan early, because this means that you will be saving on the daily interest that is accruing. However, it must not be too early. For instance, repaying a 6-month loan in 3 months will save you money. But repaying a 1-month loan after 1 week will probably be a very expensive way to borrow money for such a short period of time.
Lower interest rates may be available if you are considered to be a good candidate and present a low risk of default. For example, having a good credit score and a homeowner status will be a strong indication to a lender that you will be able to repay your loan on time – provided that you do not have too many loans outstanding.
Equally, if you are a repeat customer with that specific lender, you may be offered a reduced rate because you are considered to be a lower risk.
There are some payday loans providers that offer lower rates and My Financial Broker can help you compare and get the best deal. If you are looking at payday loan alternatives, there are other similar products available and adding security such as a car, home or guarantor, will reduce the risk for the lender and often result in a lower interest rate.