I am thinking of entering into a payday loan business. However, all claims made in the complaints, and a host of countries want to act against them, I am skeptical. But I do not understand why the industry cut his own throat. If they continue like they are going out to stifle the activities of government regulation. Come on guys, its cool to act before the government is doing. Perhaps they feel that the end is near, and they need to make money immediately.

Although I've never used one, and do feel that they can be dangerously addictive for those in dire need of funds, I can appreciate the "car rental" analogy listed below...

"Payday loans are short term loans and are not intended as long term financial solution. If you borrow $200 and have to pay $240 two weeks after, $40 should not converted to apr of 500%. Is is simply one time service charge. It is like renting a car if you rent a car for 1 day it is $30 but for 1 year it is $10950. "

Payday loans are short term loans.They are not to be taken for long term.Payday loans are really helpful because we can get loans with in few minutes.

I’m not disputing that people need a standard comparison. My point is that APR is not be the correct one.If the loan is short-term, say 1 week long, then expressing the interest rate as if it were to be applied over an entire year is grossly misleading.

I've only been inside one PayDay Loan place.. Went there with a friend and I was totally surprised at how it felt like a bank. Wasn't all nasty and Mafia-ish, like I'd imagined it to be.

I know that's just part of the picture, but I was thankful that at the very least my buddy was being treated with some respect, regardless of her financial choices during that time.

This is a good FAQ thread

/faqmaster/faq.php?category_id=12&cat_name=PayDay%20Loans%20-%20Canada

Interest rates and payday loans in Canada.

If you look at apr it is 521%, but as I said apr is not relevant for a $200 loan where payday loan companies take a risk as they do not use credit ratings to determine if an applicant is eligible for a loan. People get a payday loan because they either do not want the hassle of asking for a small loan from friends or relatives or have no where to go to get money. If you lend 200 and charge $2 it is already 26% apr. How can payday loan companies cover their operating expenses charging 20% APR?

hey denniss,
so what's the interest rate of $40 to a loan of $200 for two weeks?

You're part of mr payday..

Payday loans are short term loans and are not intended as long term financial solution. If you borrow $200 and have to pay $240 two weeks after, $40 should not converted to apr of 500%. Is is simply one time service charge. It is like renting a car if you rent a car for 1 day it is $30 but for 1 year it is $10950.

Payday Loan: Get an insight into its drawbacks

Consumers pay up to 400% on a small loan!
This is an american video, however the concept is the same in Canada.