When borrowers cannot repay a short-term loan in full on the initial due date, lenders frequently offer "rollovers" or renewals. Rollovers trigger compounding fee loops that can double the principal owed within months.
1. Compounding Rollover Fee Accumulation
⚠️ The Rollover Compound Trap ($500 Loan Example)
Original Borrowed Principal: $500.00
Original 14-Day Fee ($15/$100): $75.00
Rollover 1 (Fee Paid, $0 Principal): +$75.00
Rollover 2 (Fee Paid, $0 Principal): +$75.00
Rollover 3 (Fee Paid, $0 Principal): +$75.00
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Total Fees Paid after 60 Days: $300.00 (Principal Still $500!)