β οΈ Payday Loan Calculator
The fee looks small. The APR will shock you.
Annualized cost of the payday loan
Estimates for planning only, not financial advice.
A $500 payday loan with a $75 fee for 14 days sounds like 15 percent. Annualized, it is 391 percent APR: the fee repeats every two weeks, 26 times a year. Total repayment is $575 in fourteen days. The payday business model depends on borrowers seeing the $75 and never computing the 391 percent. Now you have computed it.
How to Use This Calculator
Enter the amount borrowed, the fee charged, and the loan term in days. The calculator annualizes the fee into a true APR and shows total repayment plus how many times more expensive it is than typical credit card debt.
Enter the cash you receive, the fee you pay, and the days until repayment.
Read the APR. Compare it to any alternative: credit cards, payment plans, borrowing from family.
If you already carry balances, our credit card payoff calculator plans the cheaper escape.
The Payday Loan APR Formula
The fee is a two-week rate; multiplying by 365/14 annualizes it. Lenders quote the fee, not the APR, precisely because 15 percent sounds tolerable and 391 percent sounds insane. Some states cap fees or ban payday lending outright; where they operate, disclosure rules require the APR in the paperwork, usually in the fine print.
Worked Example
Borrow $500, pay $75, repay in 14 days. The period rate is 75/500 = 15 percent. Annualized: 15 percent x (365/14) = 391.1 percent APR. Repayment totals $575. Roll it over once more (another $75 fee) and you have paid $150 for the use of $500 for a month: a 30 percent monthly rate, before any late fees.
Reading Your Result
Anything above 36 percent APR is widely considered predatory territory; payday loans routinely run 300 to 600 percent. The rollover trap is the real product: most payday volume comes from borrowers rolling loans repeatedly, paying fees many times the original principal. The loan is designed to be renewable, not repayable.
My rule: treat a payday loan as the absolute last resort after every alternative is exhausted: negotiate the bill, ask for a payment plan, use a credit card cash advance (bad but cheaper), borrow from family, sell something, pick up gig work. If you must take one, have the full repayment (not a rollover) scheduled before you sign. And if you are already in the rollover cycle, a nonprofit credit counselor (NFCC member agencies) can often negotiate a way out for free. For building the buffer that prevents the next one, our emergency fund calculator sizes the safety net.
Estimates for planning only, not financial advice.
Frequently Asked Questions
How is payday loan APR calculated?
Divide the fee by the loan amount, multiply by 365 divided by the loan days, times 100. A $75 fee on $500 for 14 days: (75/500) x (365/14) x 100 = 391% APR. Some states quote the fee as dollars per $100 borrowed: $15 per $100 equals the same 391%.
Why is payday loan APR so high?
Because the fee covers just days or weeks but gets annualized. A 15% two-week fee repeated 26 times a year compounds into 391%. The short term is what makes the annualized number shocking. Credit cards disclose APR the same way: the math is identical, the numbers are not.
What is the rollover trap?
When borrowers cannot repay in full and pay another fee to extend the loan. Most payday revenue comes from repeat rollovers, where fees accumulate to multiples of the original principal. Each rollover restarts the 391% meter. The CFPB found most payday volume comes from borrowers taking 10+ loans a year.
Are payday loans legal everywhere?
No. About a third of US states effectively ban them through rate caps (often 36% APR), while others permit them with fee limits. Rules vary widely; check your state's cap before borrowing. Rate-cap states still have high-cost credit: it just takes different legal forms.
What are alternatives to payday loans?
Payment plans with the biller, credit union payday-alternative loans (PALs, capped at 28%), credit card advances, negotiated due dates, gig income, selling unused items, or borrowing from family. Almost everything beats 391%. Earned wage access apps are the new gray area: cheaper than payday, less regulated.
What is a payday-alternative loan (PAL)?
Small loans from federal credit unions: $200 to $2,000, 1 to 12 months, application fee capped at $20, APR capped at 28%. Built as the anti-payday loan, with underwriting meant to be repayable. PALs require one month of credit union membership first: join before you need it.
Can payday lenders garnish wages?
They must sue and win a judgment first in most states; they cannot directly garnish. But they can send debts to collections, report to bureaus, and debit your bank account per the loan agreement, causing overdraft cascades. Judgments from payday debt are public record: the credit damage outlasts the debt.
Do payday loans affect credit scores?
Typically they do not build credit (lenders rarely report on-time payments), but defaults sent to collections do damage scores. It is an asymmetric deal: no upside for your credit, real downside. Some newer bureaus track payday borrowing: the 'no credit impact' claim is eroding.
How do I get out of the payday loan cycle?
Stop rollovers first: each one deepens the hole. Then contact a nonprofit credit counselor for a debt management plan, negotiate extended payment plans (some states mandate them), and prioritize the highest-APR loan if juggling several. NFCC member agencies offer free counseling: use them before signing anything.
What should I do before taking a payday loan?
Compute the APR with this calculator, list three cheaper alternatives and why each fails, and confirm you can repay in full (not roll over) on the due date. If repayment is uncertain, the loan will likely make things worse. The Military Lending Act caps credit to service members at 36 percent: Congress already decided 391% is indefensible.