Is there Interest on a PayDay loan?

Is there interest on a PayDay loan? An interesting question to say the least, most people forget that interest is month to month and calculated annually. Given that these loans are meant to be from paycheck to paycheck, the debtor should never be in a position to gain significant interest. However, due to the risk of the loan taken on by the creditor, as an unsecured loan, the interest is set at an incredibly high rate – to ensure that repayment is made in good time. While there is interest on any loan, these loans are small enough that any interest is manageable in comparison to the loan.

While this could also lead you into a trap, a PayDay loan is not to keep your social life going, but rather to ensure you can cover costs in a tight situation – never intended as a reliable source of money on the long term.

So, Is there interest on a PayDay loan? In short, yes, but only those who default on their loans will ever see it in the greater scheme of things.

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