What Is The APR on a Payday Loan?

What Is The APR on a Payday Loan?

When you hear of payday loans, you typically also hear about a “cycle of debt.” This misconception comes from the annual percentage rate (APR) tagged onto payday loans, making them appear as high-costing or even “predatory” loans. But as mentioned, this is an all too common misconception.

In reality, payday lending helps millions of Americans manage financial emergencies. For many, payday loans are often more affordable, dependable and transparent than the alternatives. 

So, let’s break down this cycle of debt and clear up misconceptions. Many state laws set a maximum amount for payday loan fees ranging from $10 to $30 for every $100 borrowed. A typical two-week payday loan with a $15 per $100 payment equates to an APR of almost 400%, according to the Consumer Financial Protection Bureau.

For instance, at Quick Cash 4 Less, it costs borrowers $55 to borrow $225 at 594.81% APR for 15 days or 297.41% APR for 30 days. The APR appears high for payday loans because of how they are measured.

Despite only lasting a few weeks, payday loans are measured by an annual rate where the figure is compounded repeatedly, resulting in an unrealistic and very inflated percentage. And though this rate seems ridiculous, the APR of payday loans is still less expensive than the cost of overdraft fees or bounced checks. 

Lastly, Louisiana state law protects borrowers from getting stuck in a cycle of debt by prohibiting companies from accepting fees to roll over, flip or renew a loan. Louisiana law also requires payday lenders to fully disclose all fees and terms on the promissory note, including APR, so borrowers always know the exact amount they owe and what the credit costs.

At Quick Cash 4 Less, we look out for our borrowers. Having served over 25,000 customers, our team has the lending experience you can trust. With our online payday loan process, you can typically receive a loan within one to two business days anywhere in Louisiana, from Shreveport and Convington to Lake Charles and Houma. Learn more about our online loan process and apply for a Louisiana loan today!

Learn more about our online loan process and apply for a Louisiana loan today!