Question

Bob hasn't been managing his finances very well and is in need of an emergency loan to pay rent. On July 10, he goes to Cash4U for a payday loan and borrows $500. Bob writes a postdated check for $555 which Cash4U will cash 6 days later on July 16. What is Bob's APR on his $500 loan?

Answer 1

APR = 669.17%

Step-by-step explanation:

Cash 4U is charging $55 in interest for 6 days, that means it is charging Bob $9.17 in interest per day which is equivalent to 1.8333% daily interest. If we want to determine the APR we just have to multiply the daily interest by 365 days = 1.8333% per day x 365 days = 669.17%