Low Interest Payday Loan – How To Figure Out The Apr Of A Payday Loan
The annual percentage rate (APR) of a payday loan is a helpful tool to compare rates of lenders. According to the Truth in Lending Act, passed by Congress, payday companies are to provide you with the APR. Some companies list this information on their site, while others only provide the fee amount and give you the APR after you have submitted an application.
You can figure out the APR based on the fee amount by using the following formula. This way you will have an accurate way to compare costs, enabling you to find the best deal.
The Formula
Begin by multiplying the payday loan fee by the number of pay periods in a year. So if a payday loan lender charges a fee every two weeks, then there are 26 pay periods.
For our example, we will use a loan fee of $15 for every $100 borrowed. This is a typical rate, although you can find lower rates for first time borrowers.
The formula looks like this:
15 (loan fee) x 26 (pay periods) = 390
The 390 equals the yearly charge for the loan. To find the percentage rate, we will have to do one more step. Divide the...
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