Payday loans interest are they too high?

Payday loans interest are they too high? The simple answer is that the level of interest isn't as high as the Annual Percentage Rate (APR) makes it look. Payday loans and other short-term loans have become a major talking point in recent years. One of the main reasons for this is the high APRs displayed on their adverts. Unfortunately a large proportion of this outcry is based on misunderstanding the nature of APRs and the differences between them and regular interest rates.

Short-term lenders, like most financial lenders, are required by law to display their product's Representative APR when advertising that product. APR is the interest payable on the amount borrowed as an annual rate charge, i.e. the total interest rate you would pay if you borrowed that money for a whole year. When used for loans that last a short period of time the picture becomes, to a certain extent, distorted. Promise payday loans has a representative APR of 1737 per cent but not one of its customers will ever have to pay an interest of anywhere near that. Payday loans are specially designed to only be taken for a short period of time. The whole point is that they are there to solve a short term financial emergency and are paid back on your next payday. With short term loans the cost of borrowing is representative of the speed and emergency nature of the product. While we are legally obliged to display our APR we suggest those considering taking out a payday loan concentrate not on the APR but rather the full cost of their loan. This way they will know exactly how much they are paying back. Short-term or payday loans should only be used for short-term financial needs and are not appropriate for longer-term borrowing or if you are in financial difficulty. Payday loans interest are they too high? The simple answer is that the level of interest isn't as high as the Annual Percentage Rate (APR) makes it look. Payday loans and other short-term loans have become a major talking point in recent years. One of the main reasons for this is the high APRs displayed on their adverts. Unfortunately a large proportion of this outcry is based on misunderstanding the nature of APRs and the differences between them and regular interest rates.

Short-term lenders, like most financial lenders, are required by law to display their product's Representative APR when advertising that product. APR is the interest payable on the amount borrowed as an annual rate charge, i.e. the total interest rate you would pay if you borrowed that money for a whole year. When used for loans that last a short period of time the picture becomes, to a certain extent, distorted. Promise payday loans has a representative APR of 1737 per cent but not one of its customers will ever have to pay an interest of anywhere near that. Payday loans are specially designed to only be taken for a short period of time. The whole point is that they are there to solve a short term financial emergency and are paid back on your next payday. With short term loans the cost of borrowing is representative of the speed and emergency nature of the product. While we are legally obliged to display our APR we suggest those considering taking out a payday loan concentrate not on the APR but rather the full cost of their loan. This way they will know exactly how much they are paying back. Short-term or payday loans should only be used for short-term financial needs and are not appropriate for longer-term borrowing or if you are in financial difficulty.

anchor text