Most people know what ‘APR’ stands for, as they’ve seen it with home loans, and other sort of big pieces of money - but often times, a payday loan APR can be a very daunting thing, and for good reason.

Interesting, the maximum APR allowed to be attached to a payday loan is regulated in many states. For the borrower, this is good but even then, often a short-term loan comes with an APR that is high.

Understanding an APR

Some people don’t know what APR is, or what payday loan APR is - or if it’s different at all.

APR stands for Annual Percentage Rate, which is the annual interest rate that you will be paying on the loan itself. When you have a large loan, like a home or car loan, the APR is normally very low because it takes longer to pay back the loan.

However, with Payday Loan APR, it works a little differently.

How Does This Work?

Payday loan APR is a bigger number than the home loan APR because it has one of the highest interest rates on any sort of loan because it is so short term. These loans are normally between 7 and 14 days so they are very short so you normally only pay around $10-$40 in interest.

Normally, you will find APRs that are between 250% - 390%, which is really large except that you are just borrowing a small amount and are planning to pay it back in a fast rate of time.

Of course, there are some states that keep tight tabs on APR rates charged by these companies. Therefore, the APR allowed to charge with other factors, such as the length of the loan and whether extensions are allowed, would also be regulated. Just remember that laws are different for every state - some strict and some not so rigid.

Things to Look for in a Payday Loan

If you are in the market for a payday loan APR, then remember that the lower the interest rate the less amount of money you would be required to pay back on the actual loan.

However, sometimes people overlook the fees. What happens is that they see the APR and believe it is reasonable but once fees are added, they realize they are paying outrageous fees for a loan. Therefore, it is always best to look for loan companies that offer not only a low APR, but also low fees.

Remember…

Of course, borrowing money is serious business so it is important to choose one that can get the payday loan APR that will not put you in further debt.