In the current financial climate, many Brits have decided to turn to any port in a storm, which has resulted in the payday loan industry to explode in popularity, even in the face of massive Annualised Percentage Rate interest rates on these cash loans, but are these APRs misleading to customers?

The average APR quoted by payday advance lenders is anywhere from 1,000 per cent to 4,000 per cent, which leaves a bad taste in the mouths of many people.  However, many industry experts say that this sky-high APR is actually misleading because these are short term loans, with terms that are typically 28 days or less.

The typical price of a payday loan is around £25 per every £100 borrowed. While this is often relatively inexpensive if done only once or twice over the course of a year, the true danger lies in borrowers finding themselves unable to repay the loan in full by the required date, which results in lenders 'rolling over' the loan for another month, with compounding interest accompanied by massive spikes in charges and fees that often make bad situations much, much worse.
 
However, most lenders typically do not inform their prospective borrowers regarding the dangers of having to pay back a rolled-over payday loan, as they are only bound by law to publicise their APR.  Many consumer campaigners have protested this, which has culminated in the Office of Fair Trading launching an investigation into the industry in a search for 'sharp practices' such as obfuscating the true costs of taking out payday lending.