Due to the burgeoning debt crisis in the European Union, many citizens are turning to PayDay loans. With the banks not lending as freely to its clients before the recent recession, people are looking to use pay-day loans whenever cash is quickly needed.
However, these type of loans have exorbitant finance charges. In order for the pay-day centers to make money on these 14-day loans, they will charge an outrageous annual percentage rate (APR). For example, in the USA, some centers have an APR of around 400%. Therefore, a 500 dollar loan that has to be repaid in two weeks will end up costing the customer about 577 dollars.
However, the pay-day centers in the United Kingdom are even worse. The APR for some centers are at 1,734%!!! That would mean if somebody took out a pay-day loan for about 100 pounds, then they would have to pay back 206 pounds in two weeks. It's like they are paying double for whatever they borrow. With the Summer Olympics being in London this year, do not expect the rates to come down any time soon as the country's debt will skyrocket.