Payday loan companies do provide cash at higher rates than other types of credit programs. But these rates are for short periods, so fees are often small. While payday loans are not for every credit situation, they can help during a financial emergency.
Are Rates Too High?
Payday loan rates are higher than other forms of credit for a couple of reasons. First of all, payday loans are for a small amount for a short period. Lenders have to cover the cost of processing such transactions. Unlike mortgage companies, payday companies dont add up interest charges for 30 years.
Secondly, payday loans are at a higher risk of defaulting. Since there are no credit checks, people are more likely to fail to pay back these types of loans. That cost is passed onto everyone else.
Understanding The Numbers Rates
Most people get excited about APRs, annual percentage rate. If you compared the APRs of payday loans and mortgages, you will find the payday loan will have the larger number. But, that is misleading.
For one, payday loans are held for days, not a year. So you never pay that percent. With mortgages and other types of loans, you take years to pay...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
