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.

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]