Should I get a payday loan? No, you shouldn’t get a payday loan. Payday loans are generally a bad idea because of the high-interest rates and fees. You may be better off finding another funding source, such as a personal loan from a friend or family member.

When a payday loan is computed as an annual percentage rate [APR], they typically average 300% to as high as 700%. The actual APR rates depend on how long your payday loan is outstanding.

Interestingly, the faster you pay back your payday loan, the higher the APR!

Here’s a handy Annual Percentage Rate [APR] Chart comparing the interest rates on various fees typically paid by subprime borrowers:

As you can see, when compared to bouncing a check, paying a utility bill, or a credit card late, payday loans sometimes don’t appear to be as bad as first thought!

“Like it or not, there is a market for credit in this country. Some of the people who purchase credit products – borrow – do so because of their limited means.

“Some people involved in public policy appear to wish that wasn’t the case. But policy cannot be based on aspiration. It must rest on evidence and fact. And the fact is that there is a market for credit products for people with incomes well below the national average. Some of those customers are in poverty. Some have characteristics of vulnerability. All have decided that they will borrow.

Again, some observers appear to wish this was not the case. Sometimes, parts of our political discourse have come close to suggesting that the answer to high-interest rates and controversial lending practices is to regulate out of existence all credit products for people on low incomes. And it would be nice to live in a world where people on low incomes didn’t need to borrow to make it to the end of the month. But until we reach that world, that borrowing will take place.

That being so, the priority for policymakers should be to make sure the market for credit products for people on low incomes works better for those people.” Social Market Foundation