Payday Loans Interest Rates

Payday Loans Interest RatesTrying to calculate payday loans interest rates can be a pretty scary thing to do. It’s really best not to think about it because you’ll probably end up kicking yourself for going along with it if you have already gotten one, and it will make you question whether or not you should get one if you haven’t yet.

It really boils down to whether or not a payday loan can help you in your time of need. No matter what the interest rate comes out to be, whether the APR is 300, 400, or 500% or more is it really going to make a difference if you need the cash? Payday loan companies always want you to size it up against NSF fees from your bank, and they put the rates of those overdraft fees at over 1000% as a way to make their service look more palatable.

Astronomical Payday Loans Interest Rates

Opponents to payday loans say that there is no need for these giant rates in the form of fees and other charges. In fact, when they pass legislation to try to get rid of payday loan companies they don’t necessarily outlaw the practice, they just put a cap on the percentage that they can charge, and this effectively wipes them out. Payday lenders say that they can’t make a profit and stay in business if they are forced to give loans with interest rates that rival banks and credit cards.

Technically, they could stay in business, but they would have to do such a volume that they would have to be packed from start of business to close of business to make the same sort of money they make with just a dozen or so people coming in per day.

Why Do People Accept These Rates?
You might be wondering why payday loans have such high rates, and it’s mostly because people will pay them. There hasn’t been a mass exodus of payday loan users so payday lenders haven’t had to make the decision to lower their rates as a way to stay in business. Nor will you probably see this in the near future because there aren’t a lot of alternatives between getting rejected from the bank and having someone threatening to bust your kneecaps when you take a loan out from the wrong person.

Payday Loan Reform
There are several lobbyists that are trying to reform payday loans, but you always have to question where their motives lie. Many of the lobbyists that are against payday loans are working in favor of the banks who fund their efforts. Banks don’t like payday loans because payday loans take away from their business. But banks are the ones that created the payday loan industry in the first place by being so anal about who they give their money to.

So really it’s all a big mess, and probably payday loans won’t be changing drastically too much in the near future, because people don’t like to feel like they have big brother looking out for them, and they like the thought that they are in control of what they can and cannot have available to them. And really, it’s not the fault of a payday lender that we live in a world that has created the need for payday loans. No one has a gun to your head to take out a payday loan, and you sign the agreement out of your own free will so there really shouldn’t be any animosity towards them.

Price Gouging
But it’s hard to think that they need to charge such high rates, when the CEOs of some of the larger payday loan companies make millions and millions of dollars each year. It seems like they are charging rates that are excessive, and in every single instance they will charge whatever the state-mandated maximum is. It leads one to wonder what they would charge if there were no state mandates in place. For an example of that, look to some of the online loans out there that aren’t as regulated, and have you paying back four, five, or six times more than what you borrow. They can be pretty ridiculous, and it makes payday loans interest rates look pretty good by comparison.

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