Payday Loan APR & Cost Calculator
Payday loans are short-term, high-cost loans designed to be repaid with your next paycheck.
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📐 Formula
💡 Practical Example
$500 payday loan with a $75 fee due in 14 days. - Fee per $100 Borrowed: $15.00 per $100. - Total Repayment Due on Next Payday: $575.00. - True Annual Percentage Rate (APR): [ / 14] × 365 × 100 = 391% APR.
📖 About Payday Loan APR & Cost Calculator
Payday loans are short-term, high-cost loans designed to be repaid with your next paycheck. Because fees are charged over very short terms (14 days), their annualized interest rate (APR) is frequently between 300% and 500%.
To use the Payday Loan APR & Cost Calculator, enter your Payday Loan Principal, Lender Finance Fee Charged, Loan Term. The calculator instantly computes Effective Annual Percentage Rate (APR), Total Payday Repayment Due and more. Results update in real time as you change any input — no submit button needed.
How to Use This Calculator
Enter your Payday Loan Principal (e.g. 500 in ), Lender Finance Fee Charged (e.g. 75 in ), and Loan Term — choose from options such as 14 Days (2 Weeks), 30 Days (1 Month), 7 Days (1 Week). Results update instantly as you type — no submit button or page reload required. Adjust any value to compare scenarios side by side.
The Formula
Total Repayment = Principal + Finance Fee
Fee per 100 Borrowed = (Finance Fee / Principal) × 100
Effective APR (%) = [(Finance Fee / Principal) / Days in Term] × 365 × 100%
Worked Example
500 payday loan with a 75 fee due in 14 days.
- Fee per 100 Borrowed: 15.00 per
100.
- Total Repayment Due on Next Payday: 575.
00.
- True Annual Percentage Rate (APR): [ / 14] × 365 × 100 = 391% APR.
Understanding Your Result
In a standard amortizing loan, you pay mostly interest in early payments and mostly principal at the end — this is called front-loading. For a 30-year mortgage at 7%, over 80% of your first payment goes to interest. Total interest paid on a 30-year loan often equals or exceeds the original principal. Each extra principal payment made early eliminates all future interest that would have accrued on that amount. Lenders typically require a debt-to-income (DTI) ratio below 43% for conventional loan approval, with most preferring below 36%.
💡 Financial Planning: Expert Principles & Risk Awareness
- All calculations assume fixed rates and idealized conditions. Real-world results vary due to market volatility, inflation, fees, and taxes.
- The Consumer Financial Protection Bureau (CFPB) recommends consulting a certified financial planner (CFP) for decisions involving significant sums.
- Run at least three scenarios: optimistic, pessimistic, and most-likely — to understand the full range of potential outcomes before committing.
- Inflation averages 2–3% annually in the US (Federal Reserve target). Long-term projections that ignore inflation significantly overstate future purchasing power.
- Tax treatment varies widely by account type (IRA, 401k, brokerage), jurisdiction, and income level. Verify tax implications with a CPA before acting.
- Compound interest works for you in savings/investments and against you in debt. The difference of even 1% in rate, sustained over decades, is enormous.
- Emergency funds (3–6 months of expenses) should be established before optimizing for returns — financial security precedes financial growth.
- Financial projections older than 12 months should be recalculated. Interest rates, tax brackets, and market conditions shift materially year to year.
Results are for informational and educational purposes only. Always verify critical decisions with a qualified professional.