Payday loans may be seen as a one-time emergency measure for anyone who needs quick funds, such as between paycheques. But consumers should avoid falling into the trap of holding multiple payday loans at one time, or using them regularly.
While they are framed with a dollar cost of borrowing, in percentage terms they often have interest rates in the hundreds of percent range. So how do you calculate the annual percentage rate on a payday loan? Preet Banerjee breaks it down in this Drawing Conclusions video.