A frequently advanced gripe by critics of the faxless fast cash advance trade zeroes in on the annual rate of interest charged for short term payday advance loans which might pile up to a staggering 2-300%. (You can dig deeper into the topic of getting a payday advance here.)

Such annual percentage rate or “APR” is merely a simple measure rendering the amount of interest a client will have to pay as brought forward to one full year. It implements a framework to specify which financial solution proffers a higher/lower ultimate cost to the borrower, encompassing adjuvant fees that may be exacted.Indeed, the annual interest rate has proven to be a relevant formula applicable to financial engagements covering a time span of a minimum of twelve months .Unfortunately, when looking at two weeks loans the rates of interest p.a. are indubitably less useful.

Perhaps we should liken fast cash advances to taking a taxi home from the airport. It might cost you 40 dollars to get home this way. Sure, 40 dollars may be serious money to spend on merely getting home however people opt for it as it is convenient and covers a specific deficiency. Ok, so everybody knows that we could easily rent a car for a whole day for 40 dollars including as many miles as we need to.

Let’s assume we do that– to wit, hire this car and drive it for four hundred miles during the one day we’ve hired it. Now obviously the backers of APR would probably insist that everyone ought to annualize these figures to establish a plausible correlation! To prove our point, we’ll take the price we’re paying for the taxi ride ($2/m x 400 m) giving us $800.00. The “annualized” correlative of the car rental approach versus our taxi ride equates to $40 contra $800. Of course, as everyone should have realized that car hiring we chose was not our best option, even in view of how much more expensive that APR was in this case.

Equally, short term payday bridging loans. Let’s not forget that loans till payday are restricted to two weeks only, they are not annual loan agreements. The obviously high annualized borrowing rate doesn’t tell us anything owing to the fact that this breed of loan doesn’t bridge a full year. The interest rate charge amounts to roughly 15%-25% for the entire loan. A no fax payday loan is a cost intensive contingency measure nobody should embrace without prior inspection of all available alternative options.