Loans and debt: borrow wiselyStep 1 of 6
Debt traps
Quick loans, paying one loan with another, the debt spiral and how much of your income all debt payments should stay within.
An “until payday” loan
A week before payday Murad needed 300 AZN. An ad on his phone: “Loan in 5 minutes, no paperwork!” The terms: in 30 days, repay 300 AZN plus a 60 AZN service fee. 60 AZN didn’t seem like much. But that’s 20% for just one month.
At the end of the month Murad didn’t have 360 AZN. The lender offered to “extend”: pay just 60 AZN now and roll the debt into next month. Three months went by like that.
Question
For three months Murad paid only the 60 AZN fee. How much has he paid, and how much does he still owe?