Calculate the rates on a Payday or Same Day Loan.
* Not including the amount borrowed.
Pay Day Loans And How It Works
A Payday Loan is a small loan against the next pay cheque.
A Same Day Loan is a loan that is approved and paid on the same day. These too are often for small amounts for short periods.
Both may be for a few hundred pounds or dollars and will charge a flat fee for the loan to be paid back in a number of days.
Expensive Borrowing
A loan of £200 for two weeks might levy a £20 fee.
Whilst on the face of it, that's a 10% charge. The actual APR is 260% and the EAR is 1,100%!
Are Payday Loans Illegal?
In some countries such as Canada loans with high interest rates are illegal. In some American States it is also illegal to loan "rollovers".
Military personnel are sometimes restricted to the upper limit that they can be charged for a loan. As the APR on such a loan is likely to be high, the military often can not take such loans.
Help With Payday Loans
Getting a short term loan can often be more expensive than a credit card. Unfortunately for the majority of low income that have to use payday loans, a credit card isn't likely to be available.
Those starting to get trapped in the cycle of payday loans to cover the next loan must do all in their power to get out of the rut.
- Contact all creditors and see if a freeze can be put on payments
- Ask if payment terms can be renegotiated
- Explain the payday loan trap and you need to break out of it
- Look for alternative sources of lending