Text Loans: APR Explained

APR (Annual Percentage Rate) is the term for an interest rate for a whole year as opposed to rate per month, as applied to text loans or payday loans.

When it comes to trying to get a payday loan it's a good idea to compare various loan providers and also the APR they are charging because it does give an indication which loan company charges more. Having said that, payday advances are normally short-term loans (from a few days to a couple of months) so APR can be slightly misleading.

For instance, APR increases when the loan is given for a shorter time period. You'll be repaying less if you choose shorter term loan. As an example, a £100 loan that has to be paid back after five days will probably have greater APR when compared to a £100 loan which is extended over twenty days. On the other hand, if a person decides to repay the loan in five days, the repayment sum is £110 while paying back after twenty days it is needed that you pay back a larger sum. So lower APR will not necessarily indicate that the amount you repay is smaller.

The annual percentage rate is based on various factors, taking into consideration the actual interest rate of the loan, term of the loan, repayment frequency, repayment amount and other associated fees.

As pointed out above, a lot of payday loan borrowers find APR a confusing way of measuring the real cost of the borrowed funds. Many of them find that the actual repayment amount is the proper method to evaluate how costly a loan is.

It is not unusual that payday loans have APR of 2000% and in many cases even higher which can be rated to be incredibly expensive. Then again, we should not forget that despite a very high APR the actual cost of the loan might not necessarily be high.

The annual percentage rate will be lower the longer you borrow the funds for. When you compare the APR of two loans of the identical value over different periods of time, it would seem that you would get a much better deal if you borrowed the cash for a longer time period. Nevertheless, the actual cost of the loan would be much more simply because you would need to pay back more in interest.

In conclusion, APR is the term for an interest rate for a whole year and not just monthly rate, as applied on a text loan or a payday loan. Considering the fact that payday advances are usually short-term loans it could be somewhat misleading to measure annual percentage rate mainly because APR will be lower the longer you borrow the money for. However, the real cost of the loan would be far more since you would need to pay back more in interest.

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All You Need To Know About Text Loans

Everybody knows how payday loans work. Should you be in need of cash, you can simply search online in order to find a suitable payday lender and make application for a loan, usually from £50 to as much as£1000. Pretty much everything is done online.

Most payday loan lenders do a credit assessment to be sure that you are employed, that you've got a UK bank account as well as an active debit card and are also aged 18+. Also, you need be a UK resident.

However, lately the phrase text loan has grown to be very popular. Text loans, like the name itself refers, is a loan that one can make an application for and by simply sending a text message the loan provider will transfer the money, generally within 15-60 minutes. Text loan can be a fast and convenient method of getting cash whenever you most need it.

One example is, when you have a banking account with an over-limit and you unintentionally exceed the limit which you have agreed with the bank. You would then need to start paying an interest on the sum which has gone over the limit. Many of the banks may charge extremely high interest rates. Of course, if you have signed up with a text loan company, you can just text them to get a quick loan which will be in your banking account within a few minutes. Your bank account will be in balance again and you don't need to pay the additional interest on the overdraft you had.

This is simply an example and naturally you should calculate if the rate you pay on the text loan is lower compared to the interest you pay on overdraft.

The total amount you can get by sending an SMS is generally smaller compared to when applying for an ordinary payday loan. Nevertheless, after you have registered online and are already approved, you don't have to go online to get financing. You only have to send a simple text and the money will be transferred to your banking account within 15-60 minutes.

In conclusion, text loans are simple and hassle-free way of getting cash if you need it quickly. It is ideal in case you have an urgent situation and you need a small amount of cash sent to your bank account. Nonetheless, both payday advances and text loans are short-term loans so they ought not to be used for long-term financial needs.

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