Knowing the Costs of a 3000 Cash Loan

The Costs, In Black and White

To walk you through the costs of 3000 cash loans, I will have to make a few assumptions. First, I am going to assume you are taking out a payday loan. Second, I will assume that the rate will be close to what you could expect to get from a payday loan or cash advance. The rate I will use is 485.45% APR. Finally, I will assume that the loan will be a two week loan. I think this term is probably the best, as most cash loans are due withing two weeks.

So, to summarize – here are the details of our example 3000 loan:

• Loan Amount: $3,000
• Term: 2 Weeks
• Interest Rate: 485.45% APR (annualized percentage rate)

Given these assumptions, you can expect to pay $558.60 in fees if you wanted to borrow 3000 dollars for two weeks from a payday or cash advance lender.

How did I figure that out, and how can you now figure out exactly how much you will spend in fees for the 3000 payday loan?  Well, first of all, those fees should be posted somewhere very clearly – if they aren’t then go to a different lender who is more open with their costs/charges. However, even if they are posted you still want to know how to figure out the costs yourself. Just follow this simple formula and you will be able to figure it out:

• APR%  x  Loan Amount$  /  365  x  Duration of the Loan

Basically, you just take the APR times the amount of the loan, divide what you get by 365, then multiply that by the duration of the loan.  For the example above, this formula looks like this:

• 485.45%  x  $3000  /  365  x  14 days = $558.60

(Make sure you convert the percent correctly.  485.45% = 4.8545)

What This $558.60 Cost Means

What does all this math mean?  It means that with cash loans for 3000 you will have to pay back a total amount of $3558.60 in two weeks.  It also means that you now have the number you need to use in your budget.   To find out if you can afford any short term cash loan you need to first figure out the total cost (which we have done), then take your paycheck amount, subtract out all your expenses you will have to pay (insurance, food, rent, etc.), then you see how much is left.  If you don’t have #3558.60 left over with just your next paycheck, then you shouldn’t take out the loan.