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Oct 3, 2019

How Much can the Interest Rates Vary for Payday Installment Loans?

Payday installment loans are regulated but not as stringently as home loans, car loans, personal loans and student loans. Secured loans are more strictly regulated. Unsecured loans have substantially higher rates of interest. There is nothing consumers can do about this. The very premise of unsecured lending is risky for lenders. They try to compensate for the risks with higher interests. Just as banks have varying rates of interest, private lenders offering payday installment loans also have the liberty to choose their own annual percentage rates as per their policies.

Those who are familiar with such loans know that the rate of interest can be to the tune of three hundred percent per annum. The rate could easily be up to four hundred percent per annum. It is rare for unsecured loans to have a rate of interest equivalent or even close to the rates associated with home loans and car loans. It is unlikely you will get a payday loan with an interest rate of less than two hundred percent per annum. This means you are going to pay more than twenty percent interest per month. The range of annual percentage rate is vast and you may be surprised with the quotes from private lenders based throughout the United Kingdom.

It is rare for lenders of payday installment loans to offer a rate below three hundred percent per annum. It is equally rare for lenders to charge more than four hundred percent per annum. You will probably get quotes with rates varying between three hundred and four hundred. You will also receive quotes that have identical rates of interest. The private lenders observe the practices of their competitors and try to have some kind of semblance in the terms. The rates also vary depending on the loan amount and profile of a borrower, so you may not get the same offer as others.

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Representative example: if you borrow £550 over 18 months at a flat rate of 180% per annum (fixed) with a representative 770% APR you will make 18 monthly payments of £113.06, repaying £2,035.08 in total. Rates from 45.3% APR to 1721% APR. A short term high cost loan should not be used as a long term solution. We are a broker not a lender. We don't charge fees. We don't sell your personal information. We may receive a commission from the lender.

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