Have you ever used or considered using a Payday loan? Do you think there are time to use a payday loan? I am sure there are some reasons to use a payday loan, but have you ever really considered what interest rate they are charing?
Sounds good right? Wrong. To give them $20 doesn’t sound like a lot, but consider that you are only borrowing $100 and you are paying so much to pay them back within 1 – 2 weeks normally.
What does a payday loan really cost in interest terms?
Let’s say you are borrowing $100 and going to pay $15 for 1 week loan.
What this translates to for this simple payday loan is an annual interest rate for this loan of 780% APR. If they charge you $20 instead of $15 for the 1 week payday loan you then are paying an interest of 1040% APR.
So be careful when using payday loans. Budget wisely so you don’t have to use them and then I recommend borrowing from a friend or family member if it is life or death.
[tags]payday loans, loans, APR, interest rate[/tags]