Payday Loan Interest Rates

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The truth about payday loan interest rates

Nowadays, many people ask for the help of a payday loan company in order to solve their temporary financial troubles. As appealing as such companies tend to be at the beginning, you will soon realize that the truth is far from what you are initially make to believe about getting a payday loan.
One of the main traps that are hidden behind the attractive appearance of payday loan companies refers to the interest rates, which are much higher than you would expect.
Another big trap that such companies use is the debt vicious circle. Payday loan companies allow you – or even encourage you to – rollover your debt. This means that if you don’t afford to pay back the amount you already owe, you are allowed to roll over your debt for another time, but you will be
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Although many people try to avoid getting a payday loan, there sometimes appear such desperate situations when you don’t afford to pay your bills or buy food before your next paycheck and so you need to borrow money. In emergency cases, a payday loan might seem very attractive and hence people tend to forget to look out for hidden costs.
The dangers behind payday loans
One of the greatest dangers involved in payday loans is getting trapped in the endless cycle of asking for a loan after another. The repay period for such a loan is usually short, as it is set for the next pay day, so that it is usually about two weeks. However, the interest rates that apply to such a loan are very high and so it can become difficult for you to repay the entire amount you owe.
For example, if your payday loan is for $100 and you need to repay it within two weeks, the coast of the initial loan is a $15 charge, with an annual percentage rate of 391%. In case you roll-over this loan for three times, the finance charge would increase to $60 for the same amount of $100
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