Rates & Fees
So you're ready to take out a loan, but how much will it cost you?
As with any form of credit installment loans do not come free of charge. You will be required to pay interest on top of the principal, as well as other possible fees depending on your state's regulations. Different states have different rules regarding how much interest and what fees can be charged, however federal law requires your lender to disclose all of this to you in the loan offer (The Truth in Lending Act). If you have found a loan through our system you can also double check this information in the loan agreement from your lender.
There is no cost to use our service and you are free to walk away with no obligation before signing the agreement. Once it is signed the contract is legally binding and the deposit process will begin.
Annual Percentage Rate
The interest charged on installment loans can be expressed as an Annual Percentage Rate, this is a percentage of the principal (amount borrowed) as it pertains to one year. For example if the APR on a $200 loan was 10%, then you would expect to pay $20 in interest over a one year period. If your loan term was two years then you'd expect to pay $40. If it was 6 months then you'd expect to pay $10.
This is just an example, interest rates can vary greatly from state to state and be much more than 10%.
The loan term also plays a role in how much interest is charged. Short term loans for example come with high interest rates, but the total amount you pay is low because of the short term. Longer term loans usually come with lower interest rates but because they span many months the total amount you pay in interest overall will be high.
The Interest on an installment loan is often expressed as a finance charge. This is simply the term given to the dollar amount of interest you pay per instalment or altogether. It may also include any other charges and fees. In the above example the finances charges are $20, $40 and $10. Sometimes this might be shown as x amount per $100 borrowed. For example $15 per $100 borrowed on a $400 loan is $60.
In Alabama the finance charge cannot exceed 17.5% of the principal per installment. State law can vary greatly.
Various additional fees may be applied including an admin fee, origination fee, repayment penalty (small fee for repaying early), late payment fee and others. If any of these apply they will be clearly displayed on the loan offer and loan agreement.
If you find yourself in a situation where you cannot pay an installment on time you must get in touch with the lender right away. Depending on state regulations you may be subject to a late payment fee and further interest if the repayment is not made in x amount of days. In some circumstances you may be granted a renewal or extension.
If you continue failing to make repayments - as per the Fair Debt Collection Practices Act lenders reserve the right to pursue collection proceedings against you, which may include emails, phone calls or text messages. In some cases interest will continue to be charged for as long as the debt remains outstanding.
They are also within their rights to inform the credit rating bureaus who compile your credit score. This report will then be reflected in your credit score and will make it more difficult to obtain credit in the future, as you will be deemed a financial risk to lenders. Of course if you meet the obligation with no missed payments this will be reflected positively in your credit score.
Some lenders allow you to repay early. The amount of interest you pay can be greatly reduced if you do so. For example if your loan term is one year but you decide to pay it off in full at the 6 month mark, 6 months of interest will be waived. In some cases you may be charged a fee for repaying early, but this should be offset by the interest savings.
Before applying for an installment loan it is important to consider how much you need to borrow and how much you can truly afford. Only you know your current financial situation and it is up to you to fully understand the terms of the agreement before singing the contract. If you already have debts that need to be paid off, using a new loan will only get you in to further trouble.
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