How to Calculate Payday Loan Interest APR
One of the main concerns that most payday loan borrowers have is their interest rate. Interest rates can seem out of control but one must remember that the interest rate is an annual percentage rate or APR. This means that the loan interest may seem extremely high but since payday loans are paid back within a span of two weeks, the interest paid is actually minimal. However, the problems with the cycle of debt occur when you do not pay back your loan on time. You will end up having to pay back much more than the actual amount that you took out on loan, in interest alone. A deciding factor for choosing a payday loan should be the interest rate. However, it should not be the only factor that you choose. You should take out a loan that suits your needs and is from a reliable source. Once you have found a few reliable lenders, you can then start looking at interest rates. If you are unsure of which interest rate is the best, then you should calculate your own payday loan interest rate which will then determine the actual APR that you are paying on your payday loan. Some lenders say that you will only have to pay $1o on a $100 loan, but what is the actual APR that you are paying? You will need three key pieces of information before you are able to calculate the payday loan interest APR: the exact amount that you are borrowing, how much the lender says you will be paying in interest and the turn around time. If you are paying $50 in interest on a $350 payday loan over a period of 14 days, your APR will end up being 372.45%. If you cannot payback your loan on time, are you prepared to pay back over 300% on your loan? This number is calculated by dividing the $50 or interest by the loan amount, $350. Then you multiple this answer by 365 since this number makes up a year. Your new answer is then divided by the loan term period which is 14 days. You end up with the number 3.732289. To make this number a percentage, move the decimal place over two places to the right and round up. You end up with 372.45 percent. This is that real annual percentage rate that you are paying. Check out this number before you make any payday lending decisions.Fill in the online loan application
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