Payday Loan Cost Calculator

Background.

A payday loan is priced as a flat fee, and $15 for every $100 borrowed is a common one. That sounds like 15%, and it is: 15% for two weeks. State the same price over a year, the way card and mortgage rates are quoted, and it comes to about 391%.

Making that conversion is the job here. You enter what you borrow, the dollar fee and the number of days until the loan is due, and you get back the total owed on the due date and the fee expressed as an annual rate that can sit beside other kinds of credit. The Consumer Financial Protection Bureau describes these loans as generally $500 or less and typically due on your next payday, two to four weeks out. Where state law caps the fee, the caps run from $10 to $30 per $100.

The short term is what makes the annual figure so large. The same $75 on $500 works out at 391% over 14 days but about 196% over 28, because the fee is spread across twice as many days. A smaller fee on a much shorter loan can easily be the dearer deal.

Repetition is where the real money goes. Some states let a lender roll the loan over: you pay only the fee, the due date moves out again, and the whole balance stays owed. Borrow $500 at $75, roll it over four times, and after 70 days you have paid five fees totalling $375 and still owe the $500.

The rate shown is a simple annualization, not the APR the lender must disclose, and it ignores late charges, returned-payment fees and state rules. It is for comparing offers; your contract decides what you actually owe.

What is payday loan cost calculator?

The simple annualized rate of a payday loan is the finance charge as a percentage of the amount borrowed, scaled up from the loan's term to a 365-day year with no compounding. It answers one question: if you paid this fee rate for a full year, what annual percentage would that be? The total repayment is the amount borrowed plus the fee, the single payment due when the term ends. It is a comparison aid, not the Regulation Z APR calculation printed on a loan disclosure.

How to use this calculator.

1. 01Enter the amount borrowed: the cash you receive, not the amount you will repay.
2. 02Enter the finance charge in dollars from the agreement or the lender's quote. If the price is given per $100, multiply it out: $15 per $100 on a $400 loan is $60.
3. 03Enter the term as the number of days from the day the money arrives to the due date. Count it on a calendar, because 'due on your next payday' can mean anything from a few days to a month.
4. 04Compare two offers by their annualized rates rather than their fees, since a lower fee on a shorter term can still cost more per day.
5. 05If you expect to roll the loan over, run each period separately and add up the fees; the rate stays the same while the dollars keep growing.

The formula.

Rate = fee ÷ principal × 365 ÷ days × 100%. The first part, fee ÷ principal, is the cost per dollar borrowed for one term: $75 on $500 is 0.15. Multiplying by 365 ÷ days counts how many terms of that length fit in a year, 26.07 for a 14-day loan, and the final × 100 turns the decimal into a percentage. Nothing is compounded, which matches how the fee is actually charged: once, against a single repayment. The term carries as much weight as the fee, so halving the days doubles the rate. The total repayment is principal plus fee and nothing more; late charges, returned-payment fees and the fees for any rollover all come on top.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Consumer Financial Protection Bureau, What is a payday loan?
2. [2]Federal Reserve Regulation Z, 12 CFR Part 1026, APR disclosures.
3. [3]BIPM, The International System of Units (SI Brochure), 9th ed., version 3.01, coherent derived units and quantity equations.