why do payday loans have high interest rates
When comparing payday loans, the APR can be a very confusing measure of interest. With someP, it is hard to understand how much a payday loan really costs. The APR forP Pis high because APR is calculated at an annual interest rate and is therefore taking a loan which lasts only a few weeks and multiplying it as though it was a year leading to APRs that run in the thousands. What is APR and why is it used for payday loans? APR is the official yardstick for comparing financial products so all the rates of all loans and mortgages must be presented in the form of APR. This is particularly useful for financial products that are long term because APR is based on annual measures of interest. Therefore, APR is a great measure for comparing products like mortgages andP12 month loans. The APR is used for payday loans because it is the most recognisable way to compare different loan products. P
Pencourage payday lenders to clearly state the Representative APR clearly on all advertising communications helping borrowers compare loans and therefore make an informed choice about who they wish to borrow with. The Representative APR refers to the rate of interest that will be granted to at least 51% of successful customers. The Representative APR is likely to vary based on the duration on the loan. How can you find the real cost of a payday loan? Whilst the APR does provide some guidance when comparing the real cost of a, there are other measures to consider.
Notably, the cost per daily interest that lenders charge is a very clear indicator of the cost of a payday loan. In addition, borrowers can compare the cost per S100 borrowed per month as another way of understanding how much a loan is. Cost of a loan from wizzcash. com Wizzcash. com offers instalment loans which are repaid over 3 months in equal monthly instalments. We are a cheaper and viable alternative to payday loans. A 3 month loan from wizz cash. com has a representative APR of 1265% which is significantly cheaper than your typical payday loan. We charge a daily interest rate of [daily-interest] and charge S24. 33 per S100 borrowed per month. There are no broker fees or admin fees for applying, so if your application is not successful, you will not be charged anything. One of the most flexible things about an instalment loan from wizzcash. com is the ability to repay early at any point with no early repayment fee. That means that if you wish to clear your debts early, you can do so, and you will only be charged the daily interest making your loan cheaper overall. How to apply At wizz cash. com, our entire application is online and we do not take applications over the phone or by post. You can fill in our two-page application using a desktop, laptop, mobile or tablet device you need is the internet!
We ask you to fill in a few simple details regarding your residence, employment and bank account details. We require the latter so we can run a credit check on your account and so we know where to transfer your funds. If you have been provisionally accepted, our underwriting team will get in touch to confirm a few details with you over the phone and they may request a copy of your pay-slip or bank statement to confirm employment. If we have fully accepted your application, we can transfer funds within 1 hour. We will always run a series of credit and affordability checks for every applicant before funding a loan. To be eligible to apply, customers must be over 18Pyears of age, living in the UK and in current employment earning over S750 per month. To apply, click onP Warning: Late repayment can cause you serious money problems. For help, go to www. moneyadviceservice. org. uk If you are strapped for cash and are considering taking out a payday loan, there are several things you should first consider, such as how high the fees and interest rates associated with your loan are. Often times with payday loans,В the rates are much higher than other types of loans, and can end up putting you more in debt than you were to start with. Payday loans typically range from approximately $100 to $1000, depending upon your stateвs legal minimum.
The average loam time is two weeks, after which time you would have to repay the loan along with the fees and interest you accrued over that period. These loans usually cost 400% annual interest (APR), if not more. And the finance charge to borrow $100 ranges from $15 to $30 for two week loans. These finance charges are sometimes accompanied by interest rates ranging from 300% to 750% APR. For loans shorter than two weeks, the APR can be even higher. In most cases, payday loans are much more expensive than other cash loans. For example, a $500 cash advance on an average credit card that is repaid in one month would cost you $13. 99 in finance charges and an annual interest rate of about 5. 7%. A payday loan, on the other hand, would cost you $17. 50 per $100 for borrowing the same $500, and would cost $105 if renewed once, or 400% annual interest. Read on to see examples of the charges and annual percentage rates (APR) that popular Texas lenders charge for a two week loan period. $100 borrowed results in 598. 51% APR and $22. 88 in finance charges. $200 borrowed results in 596. 64% APR and $45. 77 in finance charges. $500 borrowed results in 596. 62% APR and $114. 42 in finance charges. $1000 borrowed results in 596. 62% APR and $225. 24 in finance charges. Cash Net U. S. A $100 borrowed results in 664. 29% APR and $25. 48 in finance charges. $200 borrowed results in 664. 29% APR and $50. 96 in finance charges. $500 borrowed results in 664. 29% APR and 127. 60 in finance charges. $1000 borrowed results in 664. 29% APR and 254. 79 in finance charges. $100 borrowed results in 641. 59% APR and $25. 38 in finance charges. $200 borrowed results in 641. 59% APR and $50. 75 in finance charges. $500 borrowed results in 651. 79% APR and $126. 91in finance charges. $1000 borrowed results in 681. 77% APR and $253. 83 in finance charges. $100 borrowed results in 583. 45% APR and $22. 38 in finance charges. $200 borrowed results in 583. 45% APR and $44. 74 in finance charges. $500 borrowed results in 583. 45% APR and $111. 91 in finance charges. $1000 borrowed results in 583. 45% APR and $223. 43 in finance charges.
So before you decide to take out a payday loan, be sure to consider your options. You may find a less expensive alternative will help you to get out of debt quicker and easier. However, if you must take out a payday loan, it is imperative that you research potential lenders to determine which one has the lowest APR and finance charges. While it may appear to be a good deal at first glance, further investigation might reveal hidden fees and interest rates that could put your further in debt, and before you know it youвre back at square one.
- Views: 4
why does debt consolidation not save money
why does a bank sell your mortgage
why do you need a car loan
why do white people hate black women
why do you have to pay mortgage insurance
why do you need a car loan
why do people get a second mortgage