Payday Loan
Estimate the total cost of a payday loan including finance charges, APR, and total repayment. Free calculator with interactive charts and cost breakdowns.
About This Calculator
A payday loan is a short-term, high-cost loan typically repaid on your next payday. While it offers quick access to cash, the fees and interest rates can be extremely high -- often exceeding 300% APR. This calculator helps you understand the true cost before you borrow.
The calculator uses the standard payday loan APR formula: APR = ((finance charge / loan amount) x 365) / loan term x 100. The finance charge is entered as a fee per $100 borrowed (e.g., $15 per $100), which is the typical pricing model used by payday lenders. The total repayment includes both the principal and all finance charges.
Regional Notes
United States: Payday loans are regulated at the state level. Some states (e.g., New York, Georgia) ban them entirely, while others allow APRs exceeding 400%. The CFPB requires lenders to assess a borrower's ability to repay before making a loan. Typical finance charge: $15-$30 per $100 borrowed.
United Kingdom: The FCA regulates payday lenders with a strict price cap -- total cost (including all fees and interest) must not exceed 100% of the loan amount. Default charges are capped at £15. Typical loan amounts range from £50 to £1,000 over 1-6 months.
India: Payday-style lending operates through NBFCs and digital lending apps. Interest rates are regulated by state money lending acts and RBI guidelines, typically capped at 24%-36% per annum. Digital lenders must follow the RBI's Fair Practices Code and cannot charge excessive recovery fees.
Before taking a payday loan, consider alternatives like personal loans, credit cards, employer advances, or credit union loans, which typically offer much lower interest rates.
Frequently Asked Questions
What is a payday loan?
A payday loan is a very short-term loan provided on the agreement that the loan is repaid on the borrower's next payday. Lenders offer the loan as a percentage of the borrower's next paycheck, allowing them to access wages upfront. Payday loans typically carry very high interest rates and fees.
How is APR calculated on a payday loan?
APR on a payday loan is calculated using the formula: APR = ((finance charge / loan amount) x 365) / loan term x 100. For example, borrowing $100 with a $15 finance charge for 14 days results in an APR of 391%. This is significantly higher than credit cards or personal loans.
How much does a typical payday loan cost?
In the US, payday lenders typically charge $15 to $30 per $100 borrowed, with an average APR of around 400%. In the UK, the Financial Conduct Authority (FCA) caps payday loan costs so borrowers never pay more than double what they borrowed. In India, payday loans are less regulated but similar small-ticket instant loans can carry high interest rates.
What happens if I cannot repay a payday loan on time?
If you cannot repay a payday loan on time, lenders may offer a rollover or extension for an additional fee. This adds more interest and fees to the original loan amount, potentially leading to a debt trap. In the US, some states limit rollovers while others allow unlimited extensions. In the UK, FCA rules prevent continuous rollovers that would cause total cost to exceed the loan amount.
Are there alternatives to payday loans?
Yes, alternatives include asking creditors for payment extensions, requesting an advance from your employer, borrowing from family or friends, using a credit card, taking a personal loan from a credit union or bank, or using installment loan services. These options typically offer much lower interest rates than payday loans.
Are payday loans regulated?
In the US, payday loan regulation varies by state -- some states ban them entirely while others cap interest rates. The Consumer Financial Protection Bureau (CFPB) enforces federal rules. In the UK, the FCA caps total cost at 100% of the loan amount and limits default charges. In India, payday loans fall under money lending laws that vary by state with interest rate caps typically between 24% and 36% per annum.
What is the finance charge on a payday loan?
A finance charge is the fee a lender charges for providing the loan, typically expressed as a dollar amount per $100 borrowed (e.g., $15 per $100). This charge is separate from interest and is the primary way payday lenders make money. It must be paid in full on the repayment date along with the principal.
Can a payday loan affect my credit score?
Most payday lenders do not report on-time payments to credit bureaus, so responsible use may not build your credit. However, if the loan goes to collections, it will negatively impact your credit score. In the US and UK, unpaid payday loans can be reported to credit agencies and remain on your credit report for up to six years.