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Home > Payday Loans > Payday Loan Costs
For example, you may be charged a £25 fee for borrowing £100 until your next pay day.
You might think that £25 isn't that big a price to pay to borrow £100. However, the loan is only for a few weeks at most. If you translate the fee to an interest rate over the course of a year (annual percentage rate - APR), it can work out to being over 1000% interest.
When you compare this to the interest rate on other kinds of loan, you can see how high it is in comparison.
Make sure you understand about these fees before taking out a payday loan. While it might not seem like a very high fee at the time, if you can't pay the loan back for some reason, you could be stuck with a loan with a very high interest rate and fees.
It can be a good idea to look at alternatives to payday loans before going ahead and taking one out.
Cost of Payday Loans
Unlike most other kinds of loans, payday loan companies charge fees rather than interest.For example, you may be charged a £25 fee for borrowing £100 until your next pay day.
You might think that £25 isn't that big a price to pay to borrow £100. However, the loan is only for a few weeks at most. If you translate the fee to an interest rate over the course of a year (annual percentage rate - APR), it can work out to being over 1000% interest.
When you compare this to the interest rate on other kinds of loan, you can see how high it is in comparison.
Make sure you understand about these fees before taking out a payday loan. While it might not seem like a very high fee at the time, if you can't pay the loan back for some reason, you could be stuck with a loan with a very high interest rate and fees.
It can be a good idea to look at alternatives to payday loans before going ahead and taking one out.
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