Question
Some of the most common (and most dangerous) examples of simple interest are short-term payday loans, which some lenders also call “cash advances”. (This
is not to be confused with a cash advance on a credit card.) Let’s say that you’re going to get paid in ten days, and you need some cash for a car repair now. A
payday lender might lend you
fee charged by these types of lenders is
The amount of money you’d have to pay back is
is not to be confused with a cash advance on a credit card.) Let’s say that you’re going to get paid in ten days, and you need some cash for a car repair now. A
payday lender might lend you
fee charged by these types of lenders is
The amount of money you’d have to pay back is
Ask by Medina Kelly. in the United States
Jan 24,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
You would have to pay back $438.75 in ten days.
Solution
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Extra Insights
To calculate how much you’d need to pay back for a payday loan, we can break it down using the median fee of $35 per $100 borrowed. If you borrow $325, you can calculate the interest as follows:
For every $100, you owe $35 in fees, so for $325, you would calculate:
Now, multiply by the fee:
So, you would owe $113.75 in fees. Adding that to your original loan gives you:
You’d need to pay back $438.75 in ten days!
For every $100, you owe $35 in fees, so for $325, you would calculate:
Now, multiply by the fee:
So, you would owe $113.75 in fees. Adding that to your original loan gives you:
You’d need to pay back $438.75 in ten days!
Payday loans can trap borrowers in a cycle of debt due to their high-interest rates and short repayment periods. It’s always wise to explore alternative options, like borrowing from a friend or an emergency fund strategy. Always check if your local community has nonprofit credit counseling services—they can help you manage financial stress without the burdens of staggering fees. Remember, knowledge is power, especially when it comes to avoiding the pitfalls of high-interest borrowing!
