The article is a good introduction to investigating payday loans. It is not unusual (nay, normal) for articles not to state methods of calculating an annual percentage rate. This articles states, “Most states impose interest rate caps of 24–42 percent on consumer loans.” Not stated is the loan period time period. Since the subject is payday loans, I will assume that it means 24 percent to 42 percent monthly (nominal) annual percentage rate (NAPR) on a payday loan of the (usual) fourteen days. It is highly unlikely that the writer of this article should know the esoteric method of calculating the current <em>nominal</em>, simple-interest, mathematically untrue NAPR. It is (on the 24 percent loan) using Excel mathematical symbols, 625.71 percent, calculated as 24*365/14. The <em>compound</em> (^ symbol), mathematically true, annual percentage rate is 27,166.96 percent calculated as ((1+0.24)^(365/14)-1)*100. Now, if you don’t comprehend, Google my name, A.F. Bob Blair Jr., and see other examples. Obviously, the law should change to the compound APR.
A.F. Bob Blair Jr.
Jun 28 2014 - 9:16pm