Calculating the true cost (APR)

Payday loan costs are high as already discussed, but the main problem when taking out a online payday loan over one hundred days is the transparency of the fees associated with it.

A detailed analysis of how to calculate the costs of a payday loans is provided here.

To calculate the APR so that you can compare loan offers you need to do the following.

1. Write down the amount you wish to borrow - i.e $300
2. Write down the total amount of charges you will incur - i.e. $50
3. Write down the loan period - i.e. 100 days

Now you need to do the following to calculate the APR

1. Divide the charges by the loan amount - i.e. 50/300 = 0.16666
2. Multiple the answer by 365 days - i.e. 0.16666 x 365 = 60.83333
3. Divide the answer by the loan period days - i.e. 60.83333/100 = 0.6083333
4. Multiple this by 100 to get the APR - i.e. 0.6083333 x 100 = 60.8% APR (Annual percentage rate)

APR is a really good way to compare the charges of different payday loan providers, it is very hard to compare loans in any other way.

Depending on the loan period and company, payday loans can cost from 50% to over 2000%! So make sure you do this simple calc.