Today, the majority of people in the United States know what APR is, while understanding this is something attached to mortgage loans. However, a payday loan APR also exists, which is not understand as well.

Many states have regulated the maximum APR for payday loans, which is a good thing - but don’t think that it’s only going to be something like 10! A short term loan often has high APR.

What is an APR?

Although many people do know what an APR is, some do not. In fact, many people have no understanding of a payday loan APR.

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.

You can normally find APR numbers between 250% - 390%, which is rather large, until you consider that you’re borrowing just a small amount, and you’re going to pay it back quickly.

There are some states that have put a cap on the highest possible APR that a Payday loan company can use. They regulate how long the loan can be and if it can be renewed or extended in any way. Some states have hugely strict laws and some have none at all.

Things to Look for in a Payday Loan

When searching for a payday loan APR should be something that you keep at the top of your head. The lower the APR, less that you have to pay when you’re going to pay back your loan.

Watch out for your fees also, an APR may look good at first, but then the fees will end up costing you more then you are paying in interest. Keep your eyes open for the best companies that offer you the lowest fees and rates.

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.