Misconceptions about pay day advances

When people talk about payday loans, theyll often take a sharp intake of breath and tell you that the APR (Annual Percentage Rate) is very high. Thats true (its around 791%). But thats like complaining that a Ferrari doesnt have very good fuel consumption.

Thats because youll be paying back your pay day loan when you next get paid. So, looking at the interest rate over a year isnt very valid. Its just not a very good measure of how good this sort of cash loan is.

Yes, the APR is the rate charged for credit when the moneys paid back over a very long period of time. Your payday loan will be taken over perhaps 30 days or fewer. This means that the APR does look high, but this is down to the short timespan, the risk involved and the cost of setting up the cash loan.

The misconception arises because payday loans providers like ePayday must quote an APR by law, as we are regulated by the Office of Fair Trading (OFT). However, this figure will have no effect on the amount youre asked to repay when you next get paid. Theres a fixed rate for payday loans here at ePayday. For a 200 payday loan, you would repay 240.

No matter how inappropriate APR is as a tool for measuring your payday loan repayments, you will be quoted a figure when you take out your payday loan. This is so you can compare it with other cash advance options, such as an overdraft, store cards or credit cards. So, dont let it put you off - payday loans can be a convenient way of getting your hands on short-term cash with very few set-up hassles.

Apply for your pay day advance today!

Note that you should borrow only what you feel you can comfortably afford to pay back. Payday loans are not designed as a long-term solution to financial problems. If you have such problems, please seek credit counselling rather than taking out a payday loan.