Payday loans are cash advances that are typically approved instantly and disburse funds just as quickly for emergency situations. The application usually takes a few minutes to complete, and even first time borrowers can apply for the maximum amount allowed per state.

Yet despite the benefits that these loans provide, there is still a common misconception that the Annual Percentage Rate on interest for cash advances is inflated. This could not be further from the truth.

APR represents the interest charged over the duration of a full year. This isn't how a payday loan works. The course of the cash advance generally lasts only two weeks from the time you receive your loan until the time it's repaid.

The only way to be charged the full APR for your payday loan would be to roll it over for an entire year, or twenty-six times. State laws and general fair business practice mandates that this action is illegal in nearly every circumstance.

Considering the typical cash advance loan is repaid within two weeks, this misconception is simply unrealistic and very misleading.