What a short-term loan costs
We don't set rates and we never charge you. These examples exist so you know what to look for when a lender shows you its numbers.
Three numbers to read before you agree
The APR. The yearly cost of the loan including most fees, expressed as a percentage. Short-term lenders commonly charge APRs from the high double digits to several hundred percent, depending on the state and the product. The payment schedule. How many payments, how much each, and on which dates; usually drawn from your bank account. The total you repay. Principal plus all interest and fees. This is the number that tells you whether the loan is worth it.
Worked examples
Equal monthly payments, no extra fees, rounded to the dollar. These are illustrations of arithmetic, not offers, and not a prediction of what any lender will quote you.
| APR | Monthly | Total you repay |
|---|---|---|
| 36% | $92 | $554 |
| 99% | $109 | $654 |
| 200% | $138 | $829 |
| 400% | $203 | $1,217 |
| APR | Monthly | Total you repay |
|---|---|---|
| 36% | $100 | $1,206 |
| 99% | $134 | $1,613 |
| 200% | $198 | $2,373 |
| 400% | $344 | $4,131 |
Fees to look for
Origination or "document" fees taken out of the amount sent to you; late fees; returned-payment fees if a draft bounces; and, where state law allows, rollover or renewal charges that extend the loan without reducing what you owe. Extending a short-term loan is usually the most expensive thing you can do with it. If you can't make a payment, call the lender before the due date and ask about a payment plan.
What the law requires
Under the federal Truth in Lending Act a lender must give you the APR, the finance charge, the amount financed and the total of payments in writing before you are bound. State law caps rates and fees differently in each state, and some states don't allow some short-term products at all; that is one reason an offer in one state looks different from an offer in another, and why the service isn't available everywhere.
Before you borrow
Borrow the smallest amount that solves the problem. Compare the total you'd repay with the cost of waiting, of a payment plan with the biller, or of a credit-union small loan. Other options lists routes that often cost less or nothing.