Payday Loan Cost Calculator
Understand the real cost of short-term borrowing. Enter your loan amount and the fee charged by the lender to see the equivalent annual interest rate.
What is a payday loan?
A payday loan is a short-term, high-interest loan typically intended to cover expenses until the borrower's next paycheck. They are often for small amounts and have very high Annual Percentage Rates (APRs).
How is payday loan interest calculated?
Payday loans usually charge a flat fee for every $100 borrowed (e.g., $15 per $100). Because the loan term is very short (usually 14 days), this translates to an extremely high APR.
How do I calculate the APR of a payday loan?
The formula is: APR = (Finance Charge / Loan Amount) × (365 / Days in Term) × 100.
What are the risks of payday loans?
The primary risk is the "debt trap," where borrowers cannot afford to repay the loan and interest in full, leading them to take out another loan to cover the first one, accumulating more fees.