Payday Loan APR Calculator
Print| Total Amount Due on Payday | $0.00 |
The Payday Loan Calculator helps consumers compute the true Annual Percentage Rate (APR), total finance fees, and total repayment costs of short-term payday loans, payroll cash advances, and check-cashing loans. Uncover hidden borrowing costs on typical 14-day or 30-day loan terms.
The Payday Loan APR Formula
Because payday loans charge a flat dollar fee per $100 borrowed over very short timeframes (e.g., 14 days), calculating the true annualized APR requires converting short-term fees into annual equivalents:
Total Repayment = Loan Principal + Total Finance Fee
Periodic Interest Rate = Total Finance Fee / Loan Principal
Annual Percentage Rate (APR) = ( Periodic Rate / Loan Term in Days ) × 365 × 100
Where:
- Loan Principal: Total cash amount advanced by the payday lender.
- Total Finance Fee: Flat fee assessed by lender (commonly $15 to $30 per $100 borrowed).
- Loan Term in Days: Duration until check clearance or payroll date (typically 14 days).
Payday Loan Effective APR Benchmarks
Compare standard flat fee structures and their true annual APR equivalents for a typical 14-day loan term:
| Fee Per $100 Borrowed | 14-Day Fee on $300 Loan | 14-Day Fee on $500 Loan | Effective Annual APR (14-Day Term) |
|---|---|---|---|
| $10 per $100 | $30.00 | $50.00 | 260.71% APR |
| $15 per $100 (Standard) | $45.00 | $75.00 | 391.07% APR |
| $20 per $100 | $60.00 | $100.00 | 521.43% APR |
| $30 per $100 | $90.00 | $150.00 | 782.14% APR |
Step-by-Step Payday Loan Calculation Example
Here is an example calculating effective APR for borrowing $400 for 14 days at a standard fee of $15 per $100:
- Calculate Total Finance Fee:
4 × $15 = $60.00 total fee. - Determine Total Repayment Due:
$400 + $60 = $460.00 total paid at Day 14. - Calculate 14-Day Periodic Rate:
$60 / $400 = 0.15 (15%). - Convert to Daily Rate:
15% / 14 days = 1.0714% per day. - Calculate Annual Percentage Rate (APR):
1.0714% × 365 = 391.07% APR.
Frequently Asked Questions
Why are payday loan APRs so high compared to credit cards?
Payday loans charge flat fees over extremely brief repayment windows (14 to 30 days). When those short-term fees are annualized across 365 days, the mathematical APR spikes to between 300% and 600%.
What is a payday loan rollover cycle?
If a borrower cannot repay the full loan balance plus fees on payday, the lender allows rolling over the debt by charging another finance fee, creating a dangerous compounding debt trap.
What are safer alternatives to payday loans?
Safer financial alternatives include credit union Payday Alternative Loans (PALs) capped at 28% APR, employer payroll advances, low-interest personal loans, or non-profit credit counseling services.
Does defaulting on a payday loan ruin your credit score?
Yes. Although payday lenders rarely report on-time payments to credit bureaus, defaulted payday accounts are sold to third-party collection agencies who report delinquencies, severely damaging your credit score.