Payday loans are mostly short-term loans with higher interest rates and a life savior for the borrower in their emergencies. Though it offers instant cash as per your needs, it is important to have a clear understanding of the true cost of borrowing amount. Most of the borrowers get stuck in the common query of how much would a $5000 payday loan cost.
As the higher loan amount, you need to consider higher interest rates. Plus, with the late repayment and rollover terms, you have to pay more due to the late fees and higher fees for extending the loan terms.
Continue reading to learn the actual cost of the $5,000 payday loan with all major things to consider before applying for the loan.
How Much Does a $5,000 PayDay Loan Cost?
The monthly repayment on a $5,000 loan you borrow on payday loan options typically ranges between $150-$300.
Payday loans are calculated by adding the finance charge on top of the total amount you have borrowed. This finance charge is usually calculated based on the set percentage or the fixed dollar amount for every $100 borrowed.
In most of the states, this finance charge rate typically varies depending on the laws of different states. However, most commonly, it ranges from $10 to $30 for every $100 borrowed. In this sense, if you are borrowing about a $5,000 payday loan with a fee of $15 per $100 borrowed, the lender may charge you about =($15 x 50)
Or $750 in finance fees
So, in total, you need to repay repay
=($5,000 principal + $750 finance charge)
Or, $5,750
In case you have borrowed a $5,000 payday loan at $30 per $100 borrowed, the finance charge would be higher, which is typically $1,500.
Therefore, the total amount you would have to repay is about =($5,000 principal + $1,500 finance charge)
Or, $6,500
What is the Annual Percentage Rate (APR) of a $5000 payday loan?
Some states have specific laws that cap the annual percentage rate, which is mainly referred to as the APR rate. The APR rate can be very high, often exceeding 400%.
Now, if you are wondering about the annual percentage rate of your $5000 payday loan, there is a simple calculation you can follow:
APR = (The fee / Loan Amount you have borrowed) x (Number of Days in a Year / Loan Term in Days) x 100
Payday loans are typically short-term loans that are often given within 2 to 4 weeks.
If you take the loan with a charge of $10 per $100 borrowed for the 2-week agreement, then the APR rate will be
Fee: $5000 x 10% = $500
And ARR = ($500 / $5,000) x (365 / 14) x 100
Or, 260.7%
So, as you can see, the APR rate for a $5000 payday loan with a fee of $10 per $100 borrowed that is for 2 weeks would be about 260.7%. You can calculate ARR for any time limits on which you have completed the agreement.
Factors Influencing The $5,000 Payday Loan Cost
Here are some major factors that have a high impact on your borrowed $5000 payday loan cost:
1. Your credit history:
Though payday lenders don’t go through the hard credit check, it depends on the payday loan type you have planned to choose. For example, if you take Same-day payday loans with no credit options, you will likely get instant cash no matter how poor your credit score is.
2. Loan term:
As payday loans are short-term loans, repayment agreements are typically done starting from a day to a maximum of 2 weeks. The length of the loan matters here. If you take the largest amount, like $5,000, with a 2-week term, it will cost more than the fee you have charged for the $5,000 loan with a 1-month term.
3. State Regulations:
Each state has its laws governing payday loans. In some states, the minimum payday loan amount you can take is about $375, whereas some states allow for up to $3,000 in payday loans. For example, In Georgia, you can’t apply for a payday loan lower than that of $3,000.
4. Loan Renewal or Rollovers
In case you can’t repay the loan on time, the lenders may offer you to “roll over” the loan, where you can extend the loan terms. But for this, you may need to add extra fees to your loan charges. The fee won’t typically reduce the amount you owe.
5. Late Fees:
For the delay in the repayment, you may also be charged with late fees as a penalty. In case of a delay too long, it will highly impact your credit score as well. Gradually, you will enter into a continuous debt cycle where you may need to choose more fees than the fixed amount.
Eligibility To Qualify For A $5,000 Payday Loan?
The question now is, what are the criteria to qualify for the $500o payday loan? Have a quick check of this list and ensure you meet all the terms before you apply:
- You must be at least 18 years old to get $5000 payday loans.
- The lenders will check for a steady flow of income sources to qualify for the loans.
- You may need to provide government-issued identification as proof. This includes a driver’s license or passport.
- The lender will ask for a checking or savings account where the gift will be deposited after approval.
- You usually need to be a resident of the state from where you are applying for the loan.
- Sometimes, you need to provide a valid phone number and email address for communication.
How To Get A $5,000 Payday Loan?
When you have all the requirements and meet the criteria to get eligibility, here are the must-follow steps to get the loan. Go through them accordingly:
Look for a trusted lender.
All you need to do first is check for a trusted lender who will guide you. The lender should have a clear idea of expertise in this field with clear terms and conditions. Before choosing a lender for your loan, make sure to cross-check and compare the interest rates, fees, and repayment options from different lenders.
Complete the Application
Now it’s time to fill out the application with the needed information and correct details. Most of the lenders offer online applications for the convenience of the borrowers. Provide all the information accurately to avoid any hassle or distractions.
Wait for Approval
Once you submit the application, you need to wait for approval. This depends on the type of payday loan you choose. For the same-day payday loan, you will get the instant payment even with any credit check. Sometimes, the approval happens within minutes without any delay.
Receive Funds
Once approved, the funds will be transferred to the bank account you provided with the application. It may take one or two business days for funding, and after that, you can withdraw the money.
Advantages and Limitations of a $5,000 PayDay Loan
Before you decide to get the loan, it is quite worth having a clear understanding of the benefits and limits of getting such a big amount as a same-day payday loan option.
Pros
- Quick funding: If you need urgent cash, the payday loan offers a great advantage. You can get fast access to the cash, often within the same day or 24 hours.
- Minimal requirements: Compared to traditional loans, you will have fewer credit requirements to qualify for the loans. Lenders sometimes focus on income and a bank account for eligibility instead of credit check scores.
- No Collateral: Payday loans are known as unsecured. You don’t need to put any assets as collateral to get the approval.
Cons
- High interest rates: Payday loans are shorter-term but come with extra interest rates as a return. It sometimes seems challenging to repay for some borrowers.
- Potential for Debt Cycle: With the shorter-term rental, sometimes it is difficult to repay on time. In case you fail to repay, you will likely fall into the trap of a continuous cycle of debt and accumulating fees.
In Closing
Though the quick access to $5000 payday loans is the main benefit, it’s important to carefully consider the costs and related limitations. You may need to repay about 10%-20%, or up to 30%, for any $100 you borrow. If you can repay the loan on time and don’t apply for the rollover terms, it can help you avoid extra fees and debt.
Frequently Asked Questions
How do payday loans work?
You will borrow a small amount of money, and the lender will charge a fee or interest. You will typically come to an agreement for repayment on your next payday.
Are payday loans expensive?
Yes, payday loans are the most expensive loan type due to short-term access and the higher interest rates that borrowers have to deal with.
