Reading a Digital Loan Offer: Fees, Interest and Terms
A 'small' fee on a two-week loan can be a very high cost over a year. How to read a digital loan offer: total cost, due dates, rollover charges and penalties, before you accept.
Digital loans are designed to be accepted in a few taps. The offer screen may highlight how quickly you get the money, not how much it costs. Reading five things before you accept can save a lot.
Five things to find
- Amount received: how much actually lands in your wallet after fees.
- Total to repay: everything you will pay back.
- Due date: exact date, and whether it is one payment or several.
- Late fees and penalties: daily charges can build fast.
- Rollover or extension charges. See salary advance traps.
A quick example
Warning signs in the terms
- No clear total repayment amount.
- Consent to contact your contacts. See app permissions.
- Fees payable before the loan. See loan app scams.
Before borrowing, see borrowing safely when you need money fast. For more, see loan app scams and unlicensed lenders.
Frequently asked questions
What is the single most useful number?
The total amount you will repay, compared with the amount you actually receive.
Why do short loans look cheap?
A fee that looks small for two weeks adds up to a large cost when repeated or compared over a year.
What is a rollover?
Extending a loan you cannot repay on time, usually for another fee. Repeated rollovers can cost more than the original loan.
Sources
- What To Know About Payday and Car Title Loans, US Federal Trade Commission
- What To Know About Advance-Fee Loans, US Federal Trade Commission
- How To Get Out of Debt, US Federal Trade Commission
