If you are in the market to borrow money you have likely stumbled upon personal loans and payday loans. It is very important to understand the difference before submitting an application. If you submit an application for a payday loan with a high rates and fees, you could end up paying back twice the amount you borrowed.
An example of a short term payday loan is as follows:
- Borrowed: $ 500.00
- Fees: $ 30.00
- Total Repayments: $ 641.85
- Installments: 3 x $ 213.95 weekly
By borrowing $500 today, you will have to pay back $641.85 within three weeks. The fees and rates can get even worse for a longer period of time. Here is an example:
- Borrowed: $ 2,000.00
- Fees: $ 105.00
- Total Repayments: $ 4363.84
- Installments: 52 x $ 83.92 weekly
In the course of one year, you will have to pay back $4363.84 on a $2,000 loan. This means the amount of fees and interest will be well over double the amount of money you borrowed. This is why a personal loan is a much better option.
When you take out a personal loan with Nectar you will be assigned an annual percentage rate that is significantly lower than the rate on payday loans. If you borrow $2,000 at an annual percentage rate of 16.75% you will pay back a little over $2,387; not the $4,363.84 you would have to pay back with a payday loan.
To compound matters, payday loan companies apply very high fees for late payments. Unfortunately, borrowers get caught in the cycle of taking out one payday loan to pay for another. It can end up costing $5,000 or more to pay off a $2,000 loan.
You can learn much more about Nectar’s rates and terms at this link. Unlike payday lenders, we do not apply extremely high rates to our loans. We make borrowing money easy rather than stressful. There is no reason to pay $4363.84 for a $2,000 loan. Allow us to help you borrow money at a much more affordable rate.