The interest rate on personal payday loans is a fact that many customers take into account when deciding on one option or another. However, as we will see in this article, it is a value that varies a lot in bank loans and online mini credits . Everything you need to know about it you will find in the following lines.
The interest rates on personal payday loans are usually expressed according to two different rates: the TIN and the APR . The first one refers to the Nominal Interest Rate and is the percentage that an entity adds to a loan capital, normally an amount of money and calculated over a period of one year (although sometimes it can be calculated over other terms).
However, the APR ( Annual Equivalent Rate ) is another value that more accurately expresses the interest rate, since in this case it includes not only the TIN but also other expenses related to the credit and that the client must face in the indicated period of one year. This is the case of opening and closing expenses, commission for extensions and other specific concepts of each entity.
For this reason, although some entities can announce the TIN in an informative way in their loans, the APR is the reference value for expressing interest rates in personal payday loans.
Interest rates on personal payday loans from banks
The interest rates on personal payday loans granted by traditional banks are very rigid values and subject to very strict control. The Bank of Spain is the institution in charge of monitoring its evolution and obliges all banking entities to report promptly the APR that they are applying to their financial products, as set out in European regulations.
With all the data collected, the Bank of Spain produces a Statistical Bulletin where it is reported what is the average of the interest rates in Spain according to the different products marketed and their terms: consumer credit, mortgage operations, one year, 5 years, 10 years, etc. In addition, it also includes what is the average interest rate in the euro area, to serve as a comparison.
The values vary depending on the product and the term, and fluctuate according to the global economic situation. The weighted average for personal payday loans for a period between 1 and 5 years is usually slightly lower than 10% APR.
Interest rates on personal mini-credits
On the other hand, personal mini-credits such as those offered by Lailoan can not be compared to bank loans or lines of credit. In fact, they are not regulated by the Bank of Spain and there is no obligation to report monthly on the interest rates applied, but rather the Consumer Institutions are in charge of supervising the operation of this type of loans. The reference law is 22/2007 on distance marketing of financial services .
Therefore, it can be interesting that the APR of online microcredits is significantly higher than that of personal bank loans. However, they respond to a logic that also works in the financial products of banks: in the shorter term, greater interest . Therefore, mortgage loans tend to have a lower interest rate, since their term can exceed 40 years.
In fact, the APR is a value that does not adapt well to the concept of personal microcredit . As its name suggests, it is an annual fee, but online mini-loans like those of Lailoan never allow such long terms, but are more immediate: they are received in minutes and are returned in a total period of between 1 day and 30 days. It is this immediacy, so important to solve urgent economic problems, which raises interest rates.
However, that immediacy can also be observed in many other consumer products of our daily lives. An example used to illustrate it is that of accommodation: the price of a hotel room is much more expensive than that of a rental or property, both in terms of the square meter and the daily rate. But it is the immediate availability of accommodation and its short-term use that explains that price difference.
In the case of Lailoan, there is no fixed APR applicable to all the credits of our website. Our interest rates on personal payday loans depend on each provider, which calculates them according to the expected risk and the personal conditions of each applicant (being part of ASNEF , having high monthly income, etc.). In any case, if you are of legal age, have a bank account and enjoy some kind of stable income, you will have access to the best microfinance including credits with asnef from our website.