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Effective APR
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Total Repayment
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Fee as % of Loan
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See the true effective APR of a payday loan or cash advance before you borrow.
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Total Repayment
$0
Fee as % of Loan
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Divide the flat fee by the loan amount to get the fee as a percentage, then annualize it based on the loan term (365 days) to see the effective APR, which is often several hundred percent.
Effective APR = (Fee ÷ Loan Amount) × (365 ÷ Loan Term Days) × 100
A payday loan fee, like $60 on a $400 loan, might sound modest at first glance, roughly 15% of the amount borrowed. But because that fee is charged for a very short term, often just two weeks, annualizing it (as APR does for all forms of credit, to allow apples-to-apples comparison) produces a rate that can exceed 300-400%, dramatically higher than even high-interest credit cards.
If a borrower can't repay the full amount by the due date, many payday lenders offer to "roll over" the loan into a new term for an additional fee, without reducing the original principal. Repeated rollovers can result in paying far more in fees than the original amount borrowed, while the underlying debt never actually gets paid down, a pattern the Consumer Financial Protection Bureau has documented as a common outcome for payday borrowers.
Because payday loan APRs are so high, nearly any alternative form of borrowing, a credit union payday alternative loan, a personal loan, or even carrying a balance on a standard credit card, is likely to cost meaningfully less than a payday loan for the same amount borrowed over the same period, even accounting for credit card APRs that themselves can run 20-30%.
Payday lending is regulated very differently across states, some cap fees and APRs strictly, others prohibit payday lending entirely, and others have comparatively permissive rules. Checking your specific state's payday lending regulations, and any cooling-off or rollover limits, is worth doing before borrowing.
Payday loan fees are typically flat charges for a very short loan term, often two weeks. When that flat fee is annualized into an APR for comparison with other credit, the short repayment period causes the effective annual rate to appear extremely high, often several hundred percent.
Many payday lenders allow 'rolling over' the loan into a new term for an additional fee, which can trap borrowers in a cycle of repeated fees on the same principal amount without ever paying down the original debt.
Alternatives worth exploring first include a credit union payday alternative loan, a cash advance from an employer, a personal loan, negotiating a payment plan with the creditor you owe, or borrowing from family, all of which typically carry substantially lower costs than a payday loan.
Build a buffer instead with the Emergency Fund Calculator, or check standard loan costs with the Loan EMI Calculator.
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