What is a Payday Loan Calculator?
A payday loan calculator helps you understand the true cost of short-term borrowing. Payday loans typically charge a fixed fee per amount borrowed, which translates to extremely high Annual Percentage Rates (APR) when annualized.
This calculator shows you the total amount you'll need to repay, the cost per $100 borrowed, and the equivalent APR. Understanding these numbers helps you make informed decisions about short-term borrowing.
How to Use This Calculator
Step 1: Enter the loan amount you want to borrow.
Step 2: Input the finance charge (fee) the lender will charge.
Step 3: Select the loan term in days (typically 14 days).
Step 4: Click "Calculate" to see total repayment, cost per $100, and APR.
Step 5: Use the copy button to save your calculations.
Examples
Example 1: $500 loan with $75 fee for 14 days
Total Repayment: $575 | APR: 391%
Example 2: $300 loan with $45 fee for 14 days
Total Repayment: $345 | APR: 391%
Example 3: $1,000 loan with $150 fee for 30 days
Total Repayment: $1,150 | APR: 183%
Who Uses This Calculator?
- Borrowers – understanding the true cost before taking a loan.
- Financial Counselors – helping clients compare borrowing options.
- Consumer Advocates – educating about short-term lending costs.
- Budget Planners – determining if they can afford repayment.
- Comparison Shoppers – evaluating different lenders' fees.
Pro Tips
- Payday loan APRs often exceed 300-400% annually. Consider alternatives first.
- A lower finance charge doesn't always mean a better deal. Compare APRs.
- Rolling over payday loans can lead to debt cycles. Calculate full costs upfront.
- Some credit unions offer payday alternative loans (PALs) with much lower rates.
Frequently Asked Questions
Why are payday loan APRs so high?
Payday loans are short-term, high-risk loans with no collateral. The fees seem small for a 2-week period but translate to very high rates when annualized. A $15 fee per $100 for 14 days equals 391% APR.
What is a typical payday loan fee?
Fees typically range from $10 to $30 per $100 borrowed for a 2-week term. This equals 260% to 782% APR.
How is APR calculated on payday loans?
APR = (Finance Charge / Loan Amount) × (365 / Loan Term in Days) × 100. For example: ($75/$500) × (365/14) × 100 = 391% APR.
Are there alternatives to payday loans?
Yes. Consider credit union PALs, paycheck advances from employers, negotiating with creditors, or assistance programs. These often have much lower costs than payday loans.