Payday loan rates are known to be high. This is because they are high risk, short term loans provided by private lenders who are typically not affiliated with regulated financial institutions. Loan terms are based on how often the borrower is paid, typically one week, two weeks or one month. The shorter the term, the higher the payday loan rates will be.
One week loan
The average interest charge for a one week payday loan is just over 900 percent. So, if the borrower takes out a loan of $200, they will be charged about $38.
Two week loan
Two week payday loan rates are about half of the interest rates on a single week loan, or 450 percent. A $200 loan over two weeks would still cost about $38.
One month loan
These loans are less common, and some companies will charge an interest rate of around 450 percent, while others will charge half of that rate. If the rate remains at about 450 percent, the loan will cost about $80. If the company offers an interest rate of around 225 percent, the loan will cost about $38. It is more likely that the rate will be around 450 percent on a month loan.