Pay Day Loans
If you allow yourself to be influenced by the negative information that is being propounded by the critics of pay day loans, then you would likely believe that indeed this subprime lending facility is predatory. With an extremely high APR of payday loans, one would easily surmise that it is the most expensive form of credit to consider. Clearly, if there is anything about payday loans that would make you stop and think things over, it has got to be the high APRs, which is, according to some critics, patently ridiculous.
However, the APR is not always the true indicative of the true cost of payday loans and it would be inaccurate to consider using the APR to judge the loan value. We have to remember that payday loans are short term loans. In fact, some lenders emphasize that such credit option is actually a “short” short term loan as it must not run for more than a month. On the averageis advised by most financial advisors that a payday loan should only be used for a couple of weeks and is paid back when the next paycheck is received by the borrower. Under this situation, it is more appropriate to look at the interest in absolute terms when assessing the true cost of the loan.