The payday loan is rather a popular kind of quick credit nowadays. According to the survey, twelve million Americans take payday loans every year, spending more than $9 billion on fees covering the borrowed loan. A payday loan is a kind of credit that helps you quickly get the credit even if you have a bad credit score or low incomes.
It sounds really great until you face the consequences of this type of loan. So, let’s analyze what you should know about payday loan.
A payday loan is a quick form of short-term lending. People, who cannot get the traditional loans, usually try to get such best quick loans same day. Comparing with credit cards or personal loans, the payday loans have big annual percentage rate (APR).
How to Calculate the Charges of Payday Loan?
To consider how interest rates and fees are calculated for payday loans, we need to pay our attention to some facts below and find out the payday loan formula.
The typical interest rates commonly charge from 15% to 20% and it depends on the lender. Besides, it could be even higher in each particular state. The laws of each state in the USA regulate the maximum interest a payday loan.
The payday loan formula consists of the amount of money you have borrowed and the interest charge. To get payday loan payment calculator the only thing you need to do is to multiply the amount of borrowed money to the interest charge.
So, the only things you need to know using the payday loan calculator are two numbers: the sum of borrowed money and the interest of payday lenders. For example, you have got the payday loan $375 with an interest of 15%: 375 x 15 = 56.25. The given amount of money of $56.25 is the money you have to pay to borrow – $375. That is an interest rate of 391%. If you agree to get the loan with the interest of 20%, it would mean the following: 375 x 20 = $75 is the amount of money that you have to pay back for borrowed loan $375 and an interest rate of 521%.
The provided above formula of payday loan repayment calculator notes how much money you should pay back for your loan.
How to Count the Interest Rates of the Payday Loan?
The APR can help you to count the interest rates in a special payday loan formula. You may ask yourself: “How the payday loan interest rates calculator can help me to figure out the amount of paid interests?” Well, the case is that the payday loan interest calculator provides you the concrete interest you have to pay for the borrowed amount of money.
The payday loan formula consists of the amount of borrowed money, the numbers of interest, and repayment term.
To count the payday loan interest, you need to divide the interest to the amount of borrowed money. Then you need to multiply the received amount by 365 and at last, you need to divide the given amount by the length of the repayment term and multiply it by 100.
Formula to Calculate Interest
For example to calculate the APR of borrowed $375, we should do the following:
56.25 (a payday loan charge) ÷ 375 = 15
15 x 365 = 54.75
54.75 ÷ 14 (the term of repayment) = 3.91
3.91 x 100 = 391%
The result is that if you take a payday loan when you need to pay $20 for each borrowed $100, we have the following: 75 ÷ 375 = 2 x 365 = 73 ÷ 14 = 5.21 x 100 = 521%. According to the formula of payday loans interest rates calculator, the interest of your loan will be 521%.
The most important thing that you have to consider before taking the payday loan is a number of APR. The majority of lenders who offer the payday loans tell that the APR is not important. However, when you’re borrowing money, the APR becomes the most important information in the paperwork.
Indeed, the APR helps to measure how much do payday loans cost. The APR always includes all the payments that the lender charged to create the loan.
To sum it up, all of us face up with urgent financial expenses and sometimes the payday loan can be our rescue. But before getting that kind of loan, you should count all the aspects of this step and consider whether you may have other options. Be wise and use payday loans calculator to keep up with your financial state.