Payday Loans Annual Percentage Rate

When calculating your APR you must factor in the length of the loan. The longer the terms of your loan, meaning the time you have to repay, the smaller the APR will seem. The same is true for the opposite – if the loan is short-term, the APR will be higher. It is important to remember that APR refers to an annual percentage. A two week loan will have a much higher Annual Percentage Rate than, for example, a two year loan. Payday loans offer the borrow money that must be paid back within two, sometimes four weeks. The typical fee for a $100 loan is $15. This has received a lot of negative attention, because when you calculate the APR of this two week loan, it comes out to approximately 390%. Shocking. However when you consider that borrows have several years to pay off other loans, where the APR may be 21%, for example, then the balance is thrown off.