Borrowers looking for a means to get extra fast cash in a hurry can turn to fast payday cash loans. These loans are easy to obtain-a credit check isn’t required-and many can be processed, approved, and disbursed in a matter of hours. But all of these speediness and ease of approval can come with a hefty price. This price comes in the form of interest charged on the loan. Some interest rates are so high the borrowers are unable to repay the loan in full at its maturity, so they must roll it over or extend it. Doing this adds more interest and makes the amount due even higher. This is how some loan companies make their money-collecting more interest and late fees from people who can’t repay on time. This usually starts an endless cycle for the borrower-borrowing every month just to pay the last loan. So how can you avoid falling into this trap? Understanding how the APR works on the loan and knowing about any hidden costs and fees can help.
APR is the abbreviation for annual percentage rate and is used by loan companies to make a profit on any money that is loaned out. The higher the APR, the more money that is repaid on the loan. This type of interest can really add up, especially if money is borrowed on a long-term basis. But what about payday loans that are borrowed for only a few short weeks?
Most lending companies that are based in the United States, Canada, and the UK charge $10 to $15 per every $100 that is borrowed. This averages close to a 400% APR on the payday loan. Lenders justify using such extremely high rates because of the fact that the loans are small and very short-term. The lender wants to make a profit, and only charging 7% APR on a $500 loan for two weeks will not make them any money. Searching for a company with lowest rates could arguably be the best route to take, but it also depends on the company calculates their APR. Some companies have interest that accrues daily, and others have more complicated formulas that they follow to determine their APR and how much to charge you.
Your best option when thinking about fast payday cash loans is to do your homework. Research several companies and compare interest rates and fees to determine a company that will work for you and your situation. There are also sites that have loan calculators on them that you can plug numbers into to see how much you will end up paying by the maturity of the loan. Just be patient and after a little research you should find a lender that is right for you.
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