The Rollover Policy on Payday Loans in America

The Rollover Policy on Payday Loans in America

Quick payday loans, cash loans, cash advances, and short-term payday loans all refer to easy loans which are very popular among individuals who have bad credit or financial standing. Others think about this type of loan as their tool to solve urgent financial needs.

Applying for payday loans is easy. There is a cash payday loan form available on the side of this page that can be filled up by interested individuals in order to get started. Once the payday loan or Elyria payday loan and cash advance cash advance application has been deemed good for approval, a payday loan lender will contact you. If you will fail to qualify for any of the payday loans offers here, we will be willing to help you search for other financing options.

The name of this loan could be explained by its main feature that adjusts payment terms based on the usual arrival time of paychecks of individuals. Under normal circumstances, this is two weeks. Online payday loan lenders expect that upon the arrival of their paychecks on payday, borrowers will be able to provide agreed payments.

However, even if the name of the payday loan or (cash advance loan) itself suggests a specific payment period, repayment terms are often modified according to every borrower’s case. Payday loan lenders have the job of determining a borrower’s capacity to pay. He or she will then prepare customized payment terms and periods.

Currently, payday loan periods commonly encountered are as follows:

  • Ten days
  • Two weeks (most payday lenders use this payment period)
  • Three weeks One month + 1 day
  • Two months
  • Six months

It is common to find payday lending entities imposing the two-week pay period. However, it is also common to see payment terms extending beyond this indicated time. It must be noted that it is rare for online direct payday loan lenders only to offer payment terms exceeding a month.

A payday loan or cash advance service providers usually have this rollover policy for those who will have difficulties in making payments within the agreed time.

The mechanism of a payday loan rollover is easy to understand. The borrower is simply given more time (another two weeks) to pay the agreed amount plus an additional charge.

A good example of payday loan rates and fees is described below:

Mr. X borrowed a hundred dollars for a fee of $15. At the end of the agreed payment period of two weeks, he should pay $115. However, Mr. X failed to pay the said amount after two weeks. The payday loan lender offered to extend Mr.X’s payment period for another two weeks but he will be obliged to pay an additional $15.

This rollover policy means that after a total of 4 weeks, Mr. X will have to repay the $100 plus a total charge of $30.

Most payday loan companies charge a flat rate of $15 for $100. If this will be correlated with the usual payment period of 15 days, it means that they are actually charging a dollar per day. Of course, this will depend on individual borrowers’ cases as well as the policies of each state. Among payday loan lenders today, the following costs of service can be observed:

  • $15 charging ($100 payday loan amount)
  • 15% of the short term loan amount granted
  • 20% of the payday loan amount granted

The APR on Payday Loans

Many payday loan advertisements out there today show a 3-digit interest rate. Of course, this is normal and could be explained by the Federal Government’s mandate with regard to APR or annual percentage rate. According to this mandate, interest rates of payday loans should be expressed in APR figures.

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