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Banks like pointing to their APR percentages as proof of how affordable they are. Popular opinion holds that online loans are ridiculously expensive and not worth the investment. However, in truth, cash loans are not as expensive as most people would have you believe. For situations where you need an urgent injection of cash short-term loans offer you the best bet. Working with APR APR's refer to annual percentage rates. When evaluating the APR of a loan, it is important to realize that interest percentages only paint half the picture. For instance, if you found a bank offering loans at an APR of 10% and a loan service offering an APR of 300% per cent, your instant reaction would be that the bank loan offered the cheaper option. However, when you consider the actual cash value involved in both options and the fact that those offerred by banks typically come with fixed fees, you realize that with the fast cash option, you end up paying less. Misleading for these financial products More importantly, APRs are interest rates that are calculated over a period of 12 months. Considering that bank rates typically run for years, it makes them perfect for bank loans. But cash advances are not designed to run for 52 weeks. They are supposed to last until your next payday, which in most cases is typically two to three weeks away. What this means is that after 14 days you do not get to pay back the loan with a 300 percent interest like most people would wrongly assume. You get to pay back the amount with a fee that roughly amounts to less than 25 percent of the amount. You can use the money for buying new clothes, but that is really not what these same day advances are intended for. Working out the Math Let's put it into perspective. Suppose you wanted to borrow a $100 from the bank payable after a year. At a 10 percent interest rate, you would end up paying roughly $10 in interest. However, that is not all. You would also have to factor in the closing costs, which could easily add an extra $20 to your costs. This translates to paying $30 for a $100 advance, and that doesn't include the cost of having to visit the bank to fill out the application. On the other hand, if you took a short term $100 at an APR of 300 percent, after four weeks, you would end up paying $25 in interest. If you took the it for a shorter period, say three weeks, your interest would be even less, as low as $22. The Bottom Line When you factor in the fact that unlike bank loans, pay day advances from lenders such as www.mypaydaylender.co.uk requires less paperwork, the value of this system becomes a lot more evident and approval is easy. You can take a fast cash loan even with bad credit. These are also a lot quicker. You can have the funds deposited in your account within hours of applying, but banks tend to stretch their process out for days and sometimes months. That is not to say that bank financing is pointless. They have there benefits. Still, if you think cash advances are incredibly expensive, take a few minutes to do the math and compare them to other options. You will be pleasantly surprised with how affordable they really are.
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