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Almost everyone knows what APR stands for because they have seen it in home loans and other loans that they may have had to get or know about. A payday loan APR can be a hard thing to understand and for good reason.

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’s APR?

Many people don’t know what an APR really is, or what a payday loan APR is at all.

APR is the acronym for “Annual Percentage Rate”. This annual rate is what is attached to a loan. In the case of something large, perhaps a mortgage loan or even a smaller loan for business purposes, the percent of the APR is generally low. The reason is that these loans take longer to pay back to the lender.

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

How Does This Work?

Unfortunately, a payday loan APR is extremely high, in fact, the highest interest rate seen with any type of loan. Since this is a short term loan, which is usually no more than 14 days, the loan companies can get by charging unbelievable rates. As a result, people going this route could easily be charged anywhere from $20 to $40 in high interest.

To show just how astronomical these rates are consider that APR rates for payday loans are most often between 250% and 390%! This in itself is a ridiculous number but then when you consider the loan itself is small, if it can be paid back quickly, the rate is not so painful.

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

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.