London (PRWEB UK) 27 May 2012
A new article by payday-loans-australia.org, an information portal about short-term financing, operated by Green Spiral Media, explores the reasons for the seemingly high interest rates implemented by payday loan providers. The article explains in detail why those rates are necessary and how, when understood correctly, they can potentially have advantages not only for the lender, but for the borrower as well.
To provide a better understanding of payday loan rates in general, the payday-loans-australia.org article explains in detail the essence of the term annual percentage rate (APR), which is often the cause of confusion for those willing to apply for a payday loan. Usually, the APR rates cited on payday loan websites can reach 1,000 percent or even exceed 3,000, and that naturally discourages people from applying in the first place. Payday-loans-australia.org explains that since this rate is calculated on an annual basis, the assumption is that the borrower might keep the money for a year or longer. Yet, this is hardly the case when it comes to payday loans. Usually, payday loans are borrowed for a rather short period of time, limited to the pay date frequency of the borrower, meaning that consumers are never charged for a full year. In addition, the period for which the money is borrowed is agreed in advance and the borrower is made aware of all the charges and fees related to the payday loan.
As highlighted in the payday-loans-australia.org article, the main reason why payday loan providers apply such rates is to protect themselves against irresponsible borrowers. Since payday loans are in essence unsecured loans, that is, the borrower is not required to put up any property as collateral, lenders use high interest rates as insurance that borrowers will pay back the loan as stipulated in the payday loan agreement.
In addition, the payday-loans-australia.org article explains that the high interest rate can potentially serve as an incentive for consumers to pay back on time, which will be beneficial for their budget planning in the long run. As noted in the article, a high interest rate will help borrowers get motivated to free themselves from their debt sooner than later.
To read the full article, or to get more information about short-term cash solutions, visit payday-loans-australia.org.
About Green Spiral Media
Green Spiral Media is a company supporting several leading information websites for payday loans. The websites in question work with a selection of payday loan providers so as to offer convenient and efficient cash loans with competitive payday loan rates to those in need. In addition, the Green Spiral Media company works to keep its customers on track with the latest developments and trends in the field of short-term cash solutions.