Today, when everything is about the money, and when even the middle class sometimes cannot make ends meet, people are striving for different types of loans more and more each day. One of the loans that comprises the majority of the loans taken is instant loan. The reason for this is its convenience and the opportunity to take money on a really short notice without much trouble over administration, collateral or other requirements that regular loans usually entail. However, there is a catch to all this and it comes in the form of very high interest rates and this is why this article will deal with details concerning all the possible expenses of such a loan.
First of all, the interest rates that the lending companies can set are not regulated by law – not in the UK, not in the USA, not anywhere. That is why they vary a lot, but the usual range is from 20% to 30%. Another reason for such high rates is that in order to take an instant loan, as mentioned before, you do not have to have any collateral or anything that would the loan be secured against. Thus, for instance, let us take a simple example to show the potential expenses. Say that the rate is an average of 25% and you decide to take a loan worth $100. This means that you will have to pay back the total of $125 which, at this point does not sound like too much. However, if you need more than $100, the payback sum will be much higher. Thus, if you need $900, with the same interest rate, you will have to pay back the total of $1,215 and this example shows the right proportion.
However, this is not all. Once the payback period has expired, and for some reason you failed to pay back the whole sum, you will face further expenses. In fact, you have two options. You can either prolong the payback period in which case you will be charged with extra fees and probably even higher interest rate. The other option is to take up a new loan with the same company which cannot be higher than the one you failed to pay back, but which will cover the debt of the previous one. Although it might sound as a better solution, you will again be faced with another payback term and possibly further expenses.
To conclude with, fees and interest rates of an instant loan can really be a nightmare if you fail to pay it back on time. Thus, you should be very careful and well consider your situation and all the possibilities before you decide to take an instant loan. However, if you are absolutely sure that you can pay it back on time and if the instant loan seems like the best solution for your state of affairs, then feel free to choose it as your option.