Payday Loan Interest Rates (Forget the APR)
There is a great deal of drama within the world of finance regarding online payday loans and there is a great deal of misleading information that is being passed around to add insult to injury. In the USA and Canada, there are many states that prohibit payday loans, which has a great deal to do with the calculations of payday loan APR rates. Here in the UK, there are no legal roadblocks at this time, but the government dont like the rollover lending and they believe that these loans are causing further problems to an already critically damaged economic climate. Those that pass off misleading information and the irresponsible borrowers cause the negative rep in my opinion - the payday lenders are not at fault and offer a unique service.
One of the central issues at hand here is regarding payday loan APR rates; this is a legal figure that must be provided to the consumer before business can be conducted. An APR rate displayed by one such lender lies at 1737%. This is a useless figure to represent a payday loan product. APR (Annual Percentage Rate) is just that, an annual calculation! Payday loans are short term loans that are paid back within a month and so why should it be judged on an annual interest rate that hits into the thousands once compounding starts to kick in? What you will tend to find is that with most payday loan lenders, you will be expected to usually pay around 25% interest on the actual sum of cash that you borrow, so if you borrow 100 you will have to pay back in total 125.
Common sense tells me that this simple calculation of 25% is a useful way for us all to evaluate a payday loan product just what does a 1737% APR rate tell us? Not much. I read so much OMG, 1000% APR mumbo jumbo on various forums and you just have to bite your tongue! The purpose here at Payday Loan Companies is to guide consumers in the right manner regarding the payday loan products available today. I will need to address responsible lending, rollover lending and so forth in future articles, but today I just wanted to say my piece on the APR debate. Im sure that industry insiders will agree with my views.
(tags: payday loan apr summary, payday loan interest, payday loans interest, cash advance interest rates, paydayloansonline)
There is a great deal of drama within the world of finance regarding online payday loans and there is a great deal of misleading information that is being passed around to add insult to injury. In the USA and Canada, there are many states that prohibit payday loans, which has a great deal to do with the calculations of payday loan APR rates. Here in the UK, there are no legal roadblocks at this time, but the government dont like the rollover lending and they believe that these loans are causing further problems to an already critically damaged economic climate. Those that pass off misleading information and the irresponsible borrowers cause the negative rep in my opinion - the payday lenders are not at fault and offer a unique service.
One of the central issues at hand here is regarding payday loan APR rates; this is a legal figure that must be provided to the consumer before business can be conducted. An APR rate displayed by one such lender lies at 1737%. This is a useless figure to represent a payday loan product. APR (Annual Percentage Rate) is just that, an annual calculation! Payday loans are short term loans that are paid back within a month and so why should it be judged on an annual interest rate that hits into the thousands once compounding starts to kick in? What you will tend to find is that with most payday loan lenders, you will be expected to usually pay around 25% interest on the actual sum of cash that you borrow, so if you borrow 100 you will have to pay back in total 125.
Common sense tells me that this simple calculation of 25% is a useful way for us all to evaluate a payday loan product just what does a 1737% APR rate tell us? Not much. I read so much OMG, 1000% APR mumbo jumbo on various forums and you just have to bite your tongue! The purpose here at Payday Loan Companies is to guide consumers in the right manner regarding the payday loan products available today. I will need to address responsible lending, rollover lending and so forth in future articles, but today I just wanted to say my piece on the APR debate. Im sure that industry insiders will agree with my views.
(tags: payday loan apr summary, payday loan interest, payday loans interest, cash advance interest rates, paydayloansonline)
