Several states have made laws that protect people from high interest payday loans. To be exact around 13 states have made laws to protect people from unreasonable interest rates that come along with these loans. While not all payday loan lenders were out to charge hard working Americans out of their paychecks, some companies were doing exactly that.

Some companies justified this action by claiming a high amount of unpaid loans. People would receive paycheck advances and then never repay the loan. The companies would then sell the debt off to a collection agency for a fraction of the price of the loan. These losses were what prompted the outstanding interest rates. However, some companies have slipped in between the cracks claiming low interest rates and a one-time fee for taking out a cash advance loan.

High interest payday loans are ones that have interest rates above the normal APR (annual percentage rate) of other lending companies. Due to the economy taking a drastic downturn in America, most companies will advertise APRS around 18-22%. Of course, the better rating someone has the better the interest rate given. Companies that offer payday loans will offer loans for a onetime fee that is actually an APR that is sometimes 20-100 times the norm. If a borrower fails to pay back the loan on the date that has been set, then a lower APR will kick in. Often times some companies will fail to tell people this APR can be upwards of 30-40% for the first few days, and then gradually decline. This makes it to where the company profits big for payments that are made a few days to weeks late.

Not all payday loan companies practice with fine print hidden APR’s and fee’s it is best to research them. Look up local laws, or any other information you can about pay check advance loans to know your rights. Protection is the best weapon against being taken advantage of by high interest payday loans.