Question

How is the interest rate on a payday loan calculated?

a.
loan amount divided by total fees
b.
total fees divided by loan amount
c.
total fees divided by days of loan
d.
APR divided by 365

Answer 1

b. total fees divided by loan amount

Explanation:

The interest rate on a payday loan is usually calculated by dividing the total fees accrued in the loan repayment calculation by the exact loan amount.

Doing this will result in determining the interest rate used in a loan and it’s usually important to ensure accountability and also making sure the exact rate contained in the Loan application agreement Is the same as what is used later on.

Answer 2

b. total fees divided by loan amount

Explanation:

The interest rate on a payday loan is usually calculated by dividing the total fees accrued in the loan repayment calculation by the exact loan amount.

Doing this will result in determining the interest rate used in a loan and it’s usually important to ensure accountability and also making sure the exact rate contained in the Loan application agreement Is the same as what is used later on.