&gt;It&#x27;s a comparative figure, which is particularly important for underscoring the consequences of owing money in the long term.<p>But it&#x27;s not comparative -- in e.g. mortgages, they separate out costs (e.g. &quot;closing costs&quot;, PMI, inspection) that should rightly count towards the effective interest rate [1].  If they did the same for payday loans, they could (reasonably IMHO) break out the (far more legit) processing costs -- say, $5 in labor, $5 (amortized) for overhead like security, and then you&#x27;re paying more like $20 for &quot;interest&quot; if you measured by the same basis as a mortgage.<p>[1] For example, if they loan you $300k for the home at 5% but require $3000 in such costs, then they&#x27;ve really loaned you $297k at ~5.05%.