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What Is A Payday Loan APR

Jun 8, 2008
Almost everyone knows what APR stands for because they have seen it in home loans and other loans that they may have had to get or know about. A payday loan APR can be a hard thing to understand and for good reason.

There are many states that have regulated the maximum APR for payday loans and this is a really good thing. It's not going to be close to what you are thinking for an APR though. Try looking a lot higher because a short term loan often has a very high APR.

What's APR?

Some people don't know what APR is, or what payday loan APR is - or if it's different at all.

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.

However, with Payday Loan APR, it works a little differently.

Payday Loan APR 101

Unfortunately, a payday loan APR is extremely high, in fact, the highest interest rate seen with any type of loan. Since this is a short term loan, which is usually no more than 14 days, the loan companies can get by charging unbelievable rates. As a result, people going this route could easily be charged anywhere from $20 to $40 in high 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.

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 You Are Looking 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...

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.
About the Author
Looking for a payday loan? Then payday loan APR should be something that should be your topmost priority. The lower the APR, the lesser you have to pay when you're going to pay back your loan. Payday Loans Online with Instant Approval
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