Today, the majority of people in the United States know what APR is, while understanding this is something attached to mortgage loans. However, a payday loan APR also exists, which is not understand as well.
Interesting, the maximum APR allowed to be attached to a payday loan is regulated in many states. For the borrower, this is good but even then, often a short-term loan comes with an APR that is high.
Understanding an APR
Although many people do know what an APR is, some do not. In fact, many people have no understanding of a payday loan APR.
APR stands for Annual Percentage Rate, which is the annual interest rate that you will be paying on the loan itself. When you have a large loan, like a home or car loan, the APR is normally very low because it takes longer to pay back the loan.
On the other hand, a payday loan APR is somewhat different.
How Does Payday Loan APR Work?
Payday loan APR is a much, much bigger number than a home loan APR is - it has the highest interest rates on any sort of loan, but that's because it is a very short term loan. Usually between 7 and 14 days, these loans don't span much at all - so you usually end up only paying between $10-$40 in interest.
To show just how astronomical these rates are consider that APR rates for payday loans are most often between 250% and 390%! This in itself is a ridiculous number but then when you consider the loan itself is small, if it can be paid back quickly, the rate is not so painful.
There are some states that have put a cap on the highest possible APR that a Payday loan company can use. They regulate how long the loan can be and if it can be renewed or extended in any way. Some states have hugely strict laws and some have none at all.
When Searching for a Payday Loan...
When searching for a payday loan APR should be something that you keep at the top of your head. The lower the APR, less that you have to pay when you're going to pay back your loan.
Watch out for your fees also, an APR may look good at first, but then the fees will end up costing you more then you are paying in interest. Keep your eyes open for the best companies that offer you the lowest fees and rates.
Remember...
You should borrow wisely and don't go with a company that has high payday loan APR rates or you will feel it later.
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Payday loan APR is the key. Borrow wisely! Don't opt for a company that has too high payday loan APR - you'll feel the crunch later! Payday Loans Online with Instant Approval
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