Low Interest Payday Loan www.paydayuk.co.uk
Is there such a thing as low interest payday loans? Well, the straight answer is no, there is not any such thing as a payday advance loan with a low APR (Annual Percentage Rate). The APR is a confusing number, even to many bankers, and really shouldn’t be considered when looking at the cost of a payday advance loan. But for those of you who are still interested, I will try to explain how it works in clear, understandable terms.
A payday advance loan for £500 will cost you an additional £125 fee on average. If you look at this in terms of a fee, this is 25%. However, if you consider this as interest, the APR on this loan would be 1355% based on a 30 day loan. That is anything but a low interest payday loan! But 25% doesn’t sound so bad, does it? Let us look at some alternatives to payday advance loans and see what their interest is.
Bank Installment Loan
Bank installment loans could be taken out rather than low interest payday loans. A typical bank installment loan can be had for about 16.9% APR. That doesn’t sound too bad, does it? Well, consider the fact that a bank won’t normally loan small amounts on a short term basis because it wouldn’t be profitable for them. About the lowest amount you will be able to borrow from a bank on an installment plan is £2000. If you do a short 36 month loan at 16.9%, you will end up paying the bank an additional £973.96 in interest, or 49% of the loan. Think it gets better if you stretch the loan out to 60 months? The same 16.9% APR on a 60 month installment loan will cost you £1875.40 in interest alone, or 94% of the original loan amount. The 25% you would pay for a low interest payday loan isn’t looking too bad now, is it?
Credit Card Advance
If you take an advance on your credit card for the cash you need, you are likely to make minimum monthly payments to repay this loan. Unlike a bank installment loan, the APR on most credit cards accrue on a monthly, or even daily, basis. Depending on your interest rate, which could be as high as 23%, or more if you are a high credit risk, and how long it takes you to pay off the card, you could continue to pay accruing interest for years. This could easily triple your loan amount. A low interest payday loan is repaid in full on your next payday and there is no accruing interest to worry about.
Returned Check Fee
If you bounce a £5 check, the bank is going to charge you a minimum of £25. That adds up to well over 147 billion percent! Wow! Maybe a low interest payday loan really IS a possibility!
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