Kaleb wants to get a payday loan in the amount of $375. He knows that the annual percentage rates (APR) for these types of loans are high, but he is hoping to find one that has an APR of 40%. If Kaleb finds a business that charges a fee of $37 for the loan, what would the term of the loan need to be in order for Kaleb to get his desired APR?
Use APR = (fee ÷ loan amount) × (365 ÷ loan term in days). Here, $37 ÷ $375 ≈ 0.0987, so 0.0987 × (365 ÷ term) = 0.40. Solving gives a term of about 90 days, so the correct choice is 90 days.
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