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Payday loan interest rate – check how much it is

Payday loan is one of the most popular ways of financing needs, but the lowest interest rate on payday loans does not always mean the best offer. Below I will try to answer why this is happening.

Payday loan interest rate – one of the loan costs

Cash loan interest rate - one of the loan costs

The interest you pay is the main cost of the loan. Nominal interest rate, according to the Act, may not exceed four times the lombard rate set by the NatBank of Poland.

If you add the remaining loan costs, i.e. commission and insurance fees, to the nominal interest rate, you will receive the actual interest rate.

Good to know: Nominal interest rate and APRC – read more

That is why the lowest interest rate on a payday loan does not necessarily mean the best offer. Additional costs may cause the final repayment amount to be greater than for another loan with a higher interest rate. You must check bank offers very carefully.

Example

For example, for customers choosing an mBank payday loan, the nominal interest rate is 9.99%, but the additional costs mean the APRC is 10.46%.

Payday loan interest rate – fixed or variable?

Cash loan interest rate - fixed or variable?

The bank may offer you a payday loan with a fixed interest rate. A fixed interest rate means that you know the installment amount from the beginning to the end of the loan period. You also know the total cost of the loan when you sign the contract.

There is no variable interest rate on payday loans, but you can come across them when you are interested in a mortgage.

Payday loan – interest rate and APRC

Cash loan - interest rate and APRC

The interest rate on the loan itself, as you already know, does not determine the overall cost of the loan. You must know that the actual annual percentage rate (APRC) is an indicator to which you must pay special attention.

It reflects the actual amount of the repayment obligation, because it takes into account not only interest costs, but also commissions and other additional charges. All financial institutions are required to provide information on the APRC amount.

Remember!

Real interest rate illustrates the total cost of the loan. It is the best tool for assessing whether taking a loan involves a commission and other fees. If the difference between the nominal interest rate and APRC is large, this indicates high additional costs.

Meteor Bank payday loan interest rate

Meteor Bank cash loan interest rate

In October 2018, the interest rate on the payday loan denomination at Meteor Bank is 5%. The bank does not charge any commission for granting it, and additional fees make the APRC reach 5.12%, which is slightly higher than the nominal interest rate.

PB payday loan – interest rate

PB cash loan - interest rate

The nominal interest rate of the payday loan in PB is 8.99%. The bank charges a commission of 4.99%. Whereas the APRC is 12.35% – it means that it is higher than the nominal interest rate by 3.36%.

Bankate payday loan – interest rate

The nominal interest rate on payday loans at Bankate Bank is 9.79%. The commission is not charged and the APRC is 10.24%, which is higher than the nominal interest rate by 0.45%.

Summary

Meteor Bank offers a loan with a low interest rate and a slightly higher APRC. PB provides a lower interest rate than Bankate, but additional fees make the APRC higher.

Comparison of payday loans

Comparison of cash loans

In the Totalmoney.pl comparison website you can check which bank has the lowest interest rate on payday loans. You can also find the cheapest payday loans in the monthly credit ranking.

The data is regularly updated, so you don’t have to search for information on individual bank pages. To find out which interest rate is the lowest, by filtering offers, select “interest rate ascending”.

The above data (from 26.10.2018) show that a lower interest rate does not always mean a lower amount to be repaid. The data was collected for a loan amount of PLN 20,000 and a repayment period of 48 months.

Interest rate payday loans – what should you remember?

Interest rate cash loans - what should you remember?

The interest rate is one of the loan costs. You should also include commission and insurance, which may be mandatory or voluntary. And the total cost of credit is always determined by the APRC level and you should look at it before you sign the payday loan agreement.

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