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In what world does 5000% make any sense when talking about a $30 fee on an $150 loan? APR is clearly the wrong metric in this context. It is legally mandated to

by cm2012 12y ago

In what world does 5000% make any sense when talking about a $30 fee on an $150 loan? APR is clearly the wrong metric in this context. It is legally mandated to be shown but does not aid in decision making or customer understanding.

rahimnathwani 12y ago
I agree it is of limited use, but I don't see a better way for a customer to quickly compare loans with different terms (e.g. 1 month or 6 months), whether from the same lender or different ones.
- cm2012 12y ago
  You could compare them by total payback/amount lent, or cents on the dollar to pay back. Much simpler! Or change APR to divide by week instead of year in the calculation.
  - jiggy2011 12y ago
    Payday loans don't compound interest in the same way a real loan does, unless you miss a payment.
Loughla 12y ago
It aids in comparison to standard loans for individuals with little to no understanding of how loans or finance in general work. Tell me your thoughts on payday loan companies or car-title loan companies, please.