Loan APR Explained
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Loan APR Explained
What is APR and how does it affect my loan?
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The online application process

1. Complete a Short Application Form.

2. PaydayKong.com will let you know almost straight away if you have been approved for a loan. On rare occasions we are unable to confirm details submitted to us. If this happens, we will ask you to forward us some documentation, which may enable us to approve your loan.

3. Simply sign your loan agreement electronically using the Internet.

If you apply before 3pm Monday to Friday we will deposit the agreed funds into your account on the same day. Apply after 3pm and we will deposit your funds on the next working day. If you need funds in your account on a Monday then simply apply over the weekend and we will take care of the rest.The Consumer Credit Act 1974 requires lenders to include the APR in all credit agreements, including loans that are for a relatively short period. They must display their 'typical' APR in advertisements and the APR can vary from lender to lender as well as across the different products they offer.

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APR on Short term loans or Payday loans

APR on Short term loans or Payday loans | Loan APR Explained | Scoop.it

Annual Percentage Rates or APRs are a part of all types of credit loans whether they are payday loans, short-term loans, personal loans, credit cards, mortgages or any other types of credit agreements.

When you take out a loan you are charged interest on it that is paid over the length of the loan. APR actually describes what the true cost of borrowing money is over the course of a year. It includes the interest rate you pay on your loan as well as how you pay back the loan, how much the repayments are, the length of repayment, additional charges and fees and any payment protection insurance premiums you may have with the loan.

APR measures how much a loan or other line of credit costs you in interest over one year and is expressed as a percentage of the total amount of money that you borrow.

If you want to work out the APR you pay on a loan first take the amount of your loan and how much interest you will be charged over one year. Then divide that interest amount by the amount of your loan. Multiply the number by 100 and you get your APR. For example, you borrow £1,000 and are charged £80 in interest for that year. The APR is calculated like this:

80/1000 x 100 = 0.08 x 100 = 8%

Normally you know what the APR is before you know how much the interest you will be charged is, so you can determine how much your interest over the course of a year is by using this formula:

1000 x 8% = 80

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Why APR is used on short term loans

Why APR is used on short term loans | Loan APR Explained | Scoop.it

APR does work well when you compare long-term loans like those from a bank or building society because they are based over a 12-month term or longer. But the use of APR can make shorter-term loans like ours look quite high at first glance and less favourable in comparison.

This is because traditional lenders do not include things like fees and late payment charges in their APRs, which can make them, appear much lower than ours. Also, unlike our short-term loans, credit on cards can be subject to interest rate changes while you're still paying back the balance.

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