Payday Loans Charge 1040% Interest

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?

Here is what Payday loans do. They don’t quote interest rate they quote how much you will be charged per hundred that you borrow.Burned Money

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]

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Comments

  1. says

    Hi there. I found your blog via your comment on Problogger. You have some great info here.

    I didn’t realise how high the interest was the payday loans were charging. I’d signed up to their affiliate program, but I certainly won’t be promoting it now. Thanks.

  2. Save Money - Jake Rinard says

    Hi Catherinel,
    Welcome to MoreMerchant.com thanks for reading. These payday loans can be rough. There is probably a time and place for them but please be careful.

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