FP100 – Loan Product Acronym Description

FP100 is the acronym we use for the term, Fee Per $100, or Fee Per One Hundred Dollars – which is small consumer lending product term that describes the fees a high-interest personal loan provider charges their customers.

For example, a payday loan provider, or signature loan lender will usually charge their customers a fee for every one hundred dollars they borrow, instead of setting a standard interest rate like conventional banks and lenders do. Conventional banks will set their lending rates based on APR (annual percentage rate), whereas the small consumer lending market, such as payday loans and cash advances, set their lending rates based on a fee-per-one-hundred-dollars.  This is a really important number and indicates just how much you can expect to pay for a small pay day type of loan. It is based on an interest rate that is actually pretty high and of course the risk level of the applicant.

Generally speaking, most of these high-interest lenders charge somewhere between $15 – $30 dollars for every $100 borrowed. Some lenders may charge a lesser fee, as low as $10 in the odd case, but these lenders are dwindling every year. They want to make as much profit as possible, and the vast majority of these signature loan and payday cash advance companies are charging the maximum fee per one hundred dollars they can legally charge, based on Federal Usury laws, and State level usury laws.

Consumers who take advantage of these types of loans may not realize just how much they are paying in terms of fee’s. The amount will vary based on the length of time that the loan will be outstanding, the perceived risk level of the applicant as previously mentioned and even prevailing interest rates. These lenders must borrow money as well in order to lend it their customers and they must make a profit over top of this cost of money.

When customers borrow money at these rates they often have significant emergencies that they are dealing with which makes it necessary as far as they are concerned to borrow money at these high rates. They may need money to buy groceries, to pay for utilities, to pay some debt that cannot wait until they get paid. They may not even care about the FP – 100 price, with the urgent needs that they are dealing with.

These loans are similar to other transactions that we all enter into every day. In this case debt, which has a cost to borrow the money and a point in time that this loan must be repaid? Let’s assume that you are borrowing $500 and the FP- 100 is $30. You have agreed to repay the loan in two weeks time when you are paid from your job. The cost of this particular loan will be five times $30 or a total cost of $150. At the end of the two weeks you will need to be able to repay $650 to the lender.

The catch comes when you cannot repay this loan in total or in part. Typically there will be a penalty for not meeting your agreed to repayment plan. Each lender will have different penalties for these situations, based on the original agreement. In addition it is possible a new loan will be structured with a new FP – 100 fee which could even increase because you are now considered a higher risk. The fees and cost per one hundred dollars can add up quickly. We encourage all borrowers to make every effort to repay these loans on time to avoid these kinds of penalties.

One of the reasons for consumers needing these types of loans is that they are unable to set aside an emergency fund. Saving money for a rainy day or an emergency of some kind can make a huge difference in a person’s overall costs. Not only do you eliminate the loan costs and possible fees for late repayment, you have the security of knowing that there is money available to deal with life’s emergencies. Depending on where the money is and how it is saved, you may even generate a small amount of interest income as well.