Imagine If Everything Were Priced Like a Payday Loan
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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...
UPDATED: Jul 18, 2021
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The law requires payday loan costs to be expressed in yearly terms, even though they only have average lifetimes of two weeks. This yearly cost is referred to as a payday loan’s annual percentage rate, or APR.
By forcing lenders to price payday loans based on their APR, consumers looking to borrow a payday loan often have trouble accurately understanding how much interest they will really pay after a normal 14-day term.
If everything were priced like payday loans, everyone would have difficulty finding out the true cost of anything.
For instance, imagine if you tried to park your car and the parking meter said it would cost you $17,520 to park for one year instead of saying it would be $2 per hour.
Or what if a gas station told you that a barrel of gasoline costs $103.46 instead of $3.49 for one gallon?
How could you budget yourself if a bartender said that beer costs $125.99 for a keg instead of $3.64 for a pint?
Check out the other price comparisons to see how difficult life would be if everything were priced like a payday loan.
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