A payday loan is a loan which you have to repay on the next payday or if it is an installment payday loan on successive paydays. When a person takes a loan, be it a regular loan or a payday loan, the first thing he will want to know is how much he needs to pay back. He would want to know whether he can afford to repay the amount he plans to borrow. Online loan calculators are available for this purpose. A person who wishes to borrow a payday loan can use an online payday loan calculator available on various web sites.
A Payday Loan Calculator helps the borrower to calculate the amount of interest and the amount of repayment. The calculator consists of the following boxes:
Once you enter these details, you will know how much you have to pay back on and if it is an installment payday loan, the monthly payment to be made.
First let us find out why payday loans are expensive?
A payday loan is very easy to borrow. A payday lender does not conduct any credit check on the borrower. So people with a bad credit history can also avail of this loan easily as long as they have a steady salary income. The risk to the lender is high since he has no idea about the creditworthiness of the borrower.
Also, the borrowers of payday loans usually belong to low income groups. In spite of their weak financial background, they may get a payday loan easily since no credit check is conducted. But when it is repayment time, they find it very difficult. Payday loans therefore have high number of defaults. To offset the losses from loans which are not paid back, payday lenders charge very high interest rates.
Coming back to a payday loan calculator, many gullible borrowers only see the ease of borrowing and fail to check the amount they would have to repay. It is always better for a payday loan borrower to use a payday loan calculator and find out exactly how much he would have to pay back. If it is an amount which he cannot afford, he can desist from taking the loan and make other arrangements for money. If he does not use a payday loan calculator, he may get to know about the amount he has to repay only after borrowing the loan.
A payday loan borrower should borrow the loan only in the event of an emergency and when he is sure that he will be able to repay it on payday. Otherwise, he may have to borrow another loan to repay the earlier one resulting in an unending debt cycle.