A loan is a type of debt. All material things can be lent; this article, however, focuses exclusively on monetary loans. Like all credit instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.
- The payday lender agrees to hold the check until the borrower's next payday
- At that time, the borrower has-been the option to redeem the check by paying $460 in cash, or renew the loan (a.k.a
- "flip the loan") by paying off the $460 and then immediately taking an additional loan of $400, in consequence extending the loan for another two weeks
- In frequent states, "flipping" or "rolling over" the loan is not allowed
- In states where there is an extended payment plan, the borrower could choose to opt into a alimony plan
- If http://www.noblebusinessloans.com/business_loan.html the borrower does not pay off or refinance the loan, the lender deposits the check. In this example, the payment of the initial loan is a $60 finance charge, or 390% APR.
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