According to an article from www.dailyfinance.co.uk, the Office of Fair Trading (OFT) says that APR is not always an accurate reflection of the cost of a loan.

APR stands for annual percentage rate. Annual means one year. So APR is describing how much a loan would cost if the loan was borrowed for an entire year. QuickQuid only lends short-term loans. Our short-term loans are typically borrowed for four weeks. The law (Consumer Credit Act 1974) requires QuickQuid to list the APR simply for the fact that it’s a financial product, but APR really has nothing to do with a four-week loan. Yes, the 2356% APR listed by QuickQuid appears as a large percentage, but according to the OFT, the Typical APR for a short-term loan is not necessarily reflective of the amount of interest actually paid.

“A 2000% APR rate may actually be quite low,” says the OFT.

Here’s how to calculate the actual cost of a payday loan from QuickQuid:

For every £50 you borrow from QuickQuid, your loan’s finance charge will be between £10 and £14.75 per pay period.

So you can see that even though the APR is listed as a high percentage, the actual cost of a QuickQuid cash advance isn’t so high after all.

This entry was posted on Tuesday, February 2nd, 2010 at 11:39 pm and is filed under Payday Loan Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.