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|Consumer Installment Loan||Credit Card||Payday Loan|
|Term||12 Months||33 Months||4 Months (8 Bi-weekly Payments)|
|Rate||36% Maximum||Average of 16%||Average of 300-400%|
|Late Charges||10 Day Grace||Don't be 1 day late ~ Big Fees!|
|Payment||$100.46||$40||$81.49 (Every two weeks)|
|Interest/Fees||$205.52 (To have the money for 1 year)||$280 (Plus a 2-5% cash advance fee)||$638.60 (To have the money for 4 months)|
|Total of Payments||$1205.52||$1320||$1638.66|
In this example, if you were to borrow $1000 from LPI Loans (if your budget allows) we would set you up on a 12 month term. You would make 12 payments of $100.46. You know your exact payment for exactly how long and exactly how much you would repay if you make your payments on time. Easy to budget and you know what to expect!
A credit card may carry a lower rate; however, if you only pay the minimum due each month this could cost you more in the long run. With a credit card the payment varies and you do not always know how long it will take to payoff. In our example we used a 4% minimum payment of the original balance. If you pay that same amount it will take you about 33 months to pay off the $1000 of debt. Most credit cards also charge a cash advance fee of 2-5%. We estimate in this example that even though your rate is lower, it would take 21 extra months to pay off the card and $320 in interest/fees based on an estimated minimum due payment. If you are very disciplined and can hold yourself to the higher payment than this may work for you.
A payday loan has a purpose, but statistics show that for every 10 people that take out a payday loan: 2 1/2 will pay off on time; 2 people will renew 1 or 2 times, 1 1/2 will renew 3 or 4 times and 4 out of ten will renew the loan 5 or more times. Fees and/or interest rates average between 300-400%. (Data was compiled from a 2008 national survey; patterns may vary).