Payday Loan APR

Most people know what ‘APR’ stands for, as they’ve seen it with home loans, and other sort of big pieces of money - but often times, a payday loan APR can be a very daunting thing, and for good reason.

Many states have regulated the maximum APR for payday loans, which is a good thing - but don’t think that it’s only going to be something like 10! A short term loan often has high APR.

What’s 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.

But, a Payday loan APR doest work a little differently.

How Does This Work?

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.

Normally, you will find APRs that are between 250% - 390%, which is really large except that you are just borrowing a small amount and are planning to pay it back in a fast rate of time.

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 fees, too - while the APR might look attractive at first glance, finance fees will end up costing you twice what you’re paying in interest. Keep your eye out for the best companies that offer the lowest fees, and interest rates.

Remember…

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.