Answer:
1. Consider other options: Before taking out a payday loan, explore other options such as borrowing from friends or family, or getting a personal loan from a bank or credit union. Payday loans often have high interest rates and fees that can make them very expensive.
2. Calculate the total cost: If you decide to take out a payday loan, calculate the total cost of the loan, including interest and fees. In this case, the loan is for $900 and is paid back 11 days later for a total of $1205. This means that the interest and fees on the loan are $305.
3. Determine the annual percentage rate (APR): To compare the cost of a payday loan with other types of loans, you need to calculate the APR. The APR is the annual cost of a loan, including interest and fees, expressed as a percentage. In this case, the interest and fees on the loan are $305 for 11 days, which is equivalent to an APR of 456%.
4. Consider the repayment terms: Payday loans are typically due on your next payday, which can be as soon as one week or up to a month after you take out the loan. Make sure you understand the repayment terms and are able to repay the loan on time, or you may face additional fees and interest.
5. Plan for the future: If you do take out a payday loan, make a plan to pay it back as soon as possible to avoid additional fees and interest. Consider ways to reduce your expenses or increase your income to help pay off the loan. Avoid taking out another payday loan to pay off the first one, as this can lead to a cycle of debt.