Understanding our APR

APR explained

The APR stands for Annual Percentage Rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate charge. Typical APR is the advertised rate that applies to at least 66% of successful applicants. The APR includes factors such as:

• the interest you must pay
• how you repay the loan; the length of the loan agreement(or term); frequency and timing of payments; and amount of each payment; and
• certain fees associated with the loan

The term assumes the rate of charge for a whole year and expresses interest and other fees as an annual rate. All lenders have to tell you what their APR is before you sign a regulated consumer credit agreement.

APRs are a good way of comparing similar products but are not so effective when comparing different products. The following table demonstrates this:

As you can see the APR for the two installment loans are the same but the actual interest repaid as a percent of the loan is hugely different – and much higher than a payday loan.

A Financial Taxi

Just as commuters understand that taxi services are valuable, convenient and fast when used for short term travel needs but are inefficient for longer term travel needs, consumers understand that payday loan services are convenient when used for short term cash needs but are inappropriate to meet long term cash needs.

Imagine getting into a taxi in London and asking the driver to take you to Edinburgh. It would probably be quicker and cheaper to take a train or a plane. Yet thousands of London residents and visitors every day find cabs a cost effective and convenient mode of transportation within the City Centre. Similarly, a payday loan can be a desirable, quick and convenient personal financial management tool for a short-term cash need.

Our Charges – Completely Transparent

PaydayUK charge £25 per £100 borrowed. These are fixed charges, so the customer knows exactly how much they will have to repay from the moment they apply for the loan. It is important to look at the total amount payable and check that you can afford the repayments. Payday loans are one of the only financial products that provide the customer with complete transparency, so that you know before you apply, exactly what you are going to repay.

• There are no arrangement fees to set up the loan

Hopefully, you now have a greater understanding of why the APR for a payday loan looks so high, but remember that before you even apply for a payday loan with PaydayUK, you know exactly how much you are going to repay and when. See for yourself: