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Payday Loans Canada
What is the difference between liability and causalty insurance?
Is It Right to Compare Payday Loan Advances By Means of an APR or is it Misleading?
Explaining the Government Mortgage Bailout
Mortgage market update for Thursday, December 4th, 2008 – 4.5% interest rates?

Posted: 03 Apr 2011 04:57 AM PDT

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What is the difference between liability and causalty insurance?

Posted: 03 Apr 2011 12:13 AM PDT

I have read all of the definitions. This will be on a test tomorrow and I just do not get it. What does liability insurance cover that casualty insurance will not cover……….and visa versa.

A big thank you in advance for anyone who can get through my mental block!

Is It Right to Compare Payday Loan Advances By Means of an APR or is it Misleading?

Posted: 02 Apr 2011 10:53 PM PDT

The media attention that payday loans are receiving at the moment doesn’t focus on the fact that there is very little option for consumers to borrow small amounts of money over a short period of time. The media would much rather focus on the ‘high interest rates’ that payday loans attract.

However, have the media got it all wrong, or at least totally off target? When citing the payday loans companies for charging high amounts of interest, the media tend to use an APR. This is incorrect. The Annual Percentage Rate was designed to illustrate the amount of interest charegd on a loan over a period of 12 months or more, hence the word Annual in the name. Using an APR to illustrate the cosyt of a payday loan is a bit like being quoted a car hire charge of £14,6000 per annum when you ask for the daily rate. The actual daily cost of £40, which is the important part, is not visible or obvious to you in the quote and is therefore of little use.

This is what an APR does for a payday loan which is a short term loan. Payday Loan Advances are designed to be a short term borrowing solution lasting between 7 an 31 days. Therefore using an APR when discussing the interest charged on the loan is giving a distorted view of the real interest charges.

As it happens, most of the payday lenders are very transparent with their charges making it very clear what the charges are going to be and ho much you need to pay when it is time to repay the loan. This is more than can be said for most other types of lending, credit cards and especially bank overdrafts.

Typically, payday loans companies tend to charge around £25 for every £100 that you borrow. This means that if you borrow £200 you will payback £250 if you pay it back at the appointed time. This means that the actual interst charged is 25%. No more and no less. There are no additional charges added to the loan inflating the charges. However, that 25% interest charge expressed as an APR becomes 1,737% because of the maths calculating the interest out over 12 months. So wher eis the logic in calculating the interest charged in a year for a loan that runs for a maximum of 31 days?

Apparently, the Office of Fair trading agree that this is misleading and confusing and in a recent inter report on short term lending stated that:-

“Consumers appear to find the inclusion of the total repayment amount more helpful than an APR in understanding the cost of short-term credit. This may be due to the information distortion which results when an APR is applied to low sums over short periods. So if you find yourself in need of a payday loan, don’t worry about the APR, instead look at what the loan is actually going to cost you.

Also, you need to understand that Payday loan advances are not intended for long term borrowing. If you think that you will not be able to repay the loan when it comes around to the appointed repayment time, then don’t take out a payday loan. Find a more traditional form of longer term borrowing.

Explaining the Government Mortgage Bailout

Posted: 02 Apr 2011 09:34 PM PDT