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Payday Loan Cost Calculator

Enter the loan amount, fee and term in days to get the total repayment and effective APR.

How it is calculated

The tool treats the fee as the whole cost of the loan and scales it to a year: APR = (fee / principal) × (365 / term in days) × 100. The principal and the flat fee are in dollars and the term is in days. The total to repay is principal + fee. The annualisation is simple, with no compounding, and it assumes the loan is repaid in one payment at the end of the term and that the fee is the only charge. If you roll the loan over, add the new fee as a separate loan or add it to the fee. The principal and the term must be above zero and the fee cannot be negative. The way lenders must state APR varies by country, so this is the plain formula rather than a legal disclosure.

Worked example

You borrow $400 and the lender charges a flat $60 fee for 14 days. Cost for the period: 60 / 400 = 0.15, or 15%. A year holds 365 / 14 = 26.07 such periods. APR = 0.15 × 26.07 × 100 = 391.07%. The total to repay is 400 + 60 = $460.00, so a 15% fee for two weeks is the same as about 391% a year.

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Common mistakes

  • Judging the loan by the fee alone. A $60 fee looks small, but over 14 days it is 15% of the money borrowed, equal to 391.07% a year.
  • Entering the term in weeks or months. The field is days, so a 2-week loan is 14, and typing 2 would give an APR 7 times too high.
  • Typing the fee as a percentage. The field is the flat fee in dollars, so $15 per $100 on $400 is 60, not 15.
  • Leaving out other charges such as a late fee or a rollover fee. The APR shown covers only the fee you enter, so a rolled-over loan costs more than one period's fee.
  • Comparing this APR directly with a credit card's compounded APR without noting the difference. Both are annual, but a payday loan repaid in 14 days never reaches a full year.

Sources

About this calculator

This calculator translates a payday loan's flat fee into an annual percentage rate (APR) that actually reveals its cost: APR = (fee ÷ amount borrowed) × (365 ÷ term in days) × 100. This is a simple annualization, with no compounding. Because payday loans run for only a couple of weeks, a fee that looks modest in dollars annualizes into a triple-digit — sometimes quadruple-digit — interest rate.

Consumer advocates and regulators use exactly this APR conversion to compare payday loans against credit cards, personal loans and overdraft fees on equal terms, since the short term otherwise hides how expensive the borrowing really is.

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Comments (1)

  • Editorial team

    The APR scales a flat fee to a year, so the same fee looks far worse the shorter the term: 45 on 300 for 14 days is 391.07%, but for 1 day it would be 5,475.00%. Since you repay only once, the cash cost is simply the fee, which is often the easier number to compare. Post an offer's fee and term and the APR you get.

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