BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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credit unions
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payday loans
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commercial banks
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Detailed explanation-1: -Unlike other personal loans, payday loans often feature interest rates ranging from 391% to 600%. Some states have placed caps on payday loan interest rates. For example, 18 states have limited interest rates to 36% on a loan of $300.
Detailed explanation-2: -Watch out for high fees Payday loans have high fees that can equate to annual percentage rates, or APRs, of around 400%-much higher than personal loan APRs, which average around 10% to 11% for a 24-month term, according to the Federal Reserve.
Detailed explanation-3: -Cost of a payday loan A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to about 30 percent.
Detailed explanation-4: -Many payday lenders do not rely on a credit check at all. They understand that most borrowers looking for payday loans typically do not have the best credit. Instead, lenders make up for the increased credit risk by charging higher interest rates and more fees.