|
Written by Ethan Hunter
|
|
Saturday, 07 June 2008 |
|
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.
by EthanHunter
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.
What is an APR?
Many people don't know what an APR really is, or what a payday loan APR is at all.
APR is the acronym for "Annual Percentage Rate". This annual rate is what is attached to a loan. In the case of something large, perhaps a mortgage loan or even a smaller loan for business purposes, the percent of the APR is generally low. The reason is that these loans take longer to pay back to the lender.
But, a Payday loan APR doest work a little differently.
Payday Loan APR 101
Payday loan APR is a bigger number than the home loan APR because it has one of the highest interest rates on any sort of loan because it is so short term. These loans are normally between 7 and 14 days so they are very short so you normally only pay around $10-$40 in interest.
You can normally find APR numbers between 250% - 390%, which is rather large, until you consider that you're borrowing just a small amount, and you're going to pay it back quickly.
Some states have regulated the highest possible APR that payday loan companies are allowed to use, along with other things - like how long a loan can be out, and if you can renew it or extend it in any way. These laws vary wildly - while some states have very strict laws, some have none at all.
When You Are Looking For A Payday Loan
If you are in the market for a payday loan APR, then remember that the lower the interest rate the less amount of money you would be required to pay back on the actual loan.
However, sometimes people overlook the fees. What happens is that they see the APR and believe it is reasonable but once fees are added, they realize they are paying outrageous fees for a loan. Therefore, it is always best to look for loan companies that offer not only a low APR, but also low fees.
Conclusion
Of course, borrowing money is serious business so it is important to choose one that can get the payday loan APR that will not put you in further debt.
|
The Internet > 
