David is a Chartered Financial Analyst with 15 years of experience in consumer lending and financial risk assessment.
This 4-in-1 Payday Loan calculator reveals the true cost of this loan type. Enter any three variables—Loan Amount, Finance Charge, Loan Term (in days), or Annual Rate (APR)—to solve for the fourth.
Payday Loan Calculator
Payday Loan Formulas (APR)
R = (F / P) * (365 / T) * 100
Solve for Finance Charge (F):
F = P * (R / 100) * (T / 365)
Solve for Loan Amount (P):
P = F / ((R / 100) * (T / 365))
Solve for Loan Term (T):
T = (F / P) / (R / 100) * 365
Formula Variables
- (P) Loan Amount: The amount of cash you receive from the payday lender.
- (F) Finance Charge: The total fee or interest (in dollars) you pay to borrow the money.
- (T) Loan Term (Days): The length of the loan, typically 14 or 30 days (until your next payday).
- (R) Annual Rate (APR): The Annual Percentage Rate, which represents the true annual cost of the loan.
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What is a Payday Loan?
A payday loan is a small, short-term, high-cost loan, typically for $500 or less, that is designed to be repaid on your next payday. These loans are often marketed as a quick and easy way to get cash for an emergency. However, they are one of the most expensive forms of credit available.
The cost of a payday loan is usually a fixed fee, such as $15 for every $100 borrowed. This fee-based structure can be misleading. A $15 fee on a $100 loan for 14 days doesn’t sound like much, but when annualized, it translates to an extremely high Annual Percentage Rate (APR). This calculator’s primary function is to reveal that APR, showing you the true cost compared to other types of credit.
Because of the high cost and short repayment window, many borrowers are unable to repay the full amount on time and are forced to “roll over” the loan, paying another fee to extend the due date. This can lead to a dangerous cycle of debt. This tool helps you understand the numbers before you borrow.
How to Calculate a Payday Loan APR (Example)
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Identify Your Loan Details
You need to borrow $300 (P). The lender charges a $45 (F) finance fee. The loan is due in 14 days (T). You want to find the APR (R).
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Find the Cost per Day
First, find the fee as a percentage of the loan: ($45 / $300) = 0.15, or 15% for 14 days.
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Calculate the Annualized Rate
To find the APR, we see how many 14-day periods are in a year (365 / 14 = 26.07) and multiply that by the 14-day rate.
Formula: R = (F / P) * (365 / T) * 100 -
Apply the Formula
R = ($45 / $300) * (365 / 14) * 100
R = 0.15 * 26.0714 * 100
R = 3.9107 * 100
R = 391.07% -
Final Result
A $45 fee on a $300, 14-day loan is equivalent to a 391.07% APR.
Frequently Asked Questions (FAQ)
The APR is high because you are paying a large fee for a very short-term loan. When that fee is annualized to show what it would cost over a full year, the percentage becomes extremely large. A $15 fee for a 2-week loan is a 391% APR.
What happens if I can’t repay the payday loan?If you cannot repay, the lender will likely offer to “roll over” the loan. This means you pay *only* the finance charge (e.g., $45) and the loan is extended for another period (e.g., 14 days). You still owe the original $300. This is how the debt trap begins, as you can end up paying many times the original loan amount in fees alone.
Is a payday loan a good idea?Most financial experts strongly advise against payday loans due to their predatory nature and high costs. Alternatives include personal loans from a credit union, cash advances from a credit card (which have high APRs, but are still far cheaper than payday loans), or asking for help from family.
How do I find the Finance Charge from an APR?You can use this calculator. Enter the Loan Amount (P) you need, the APR (R) the lender advertises, and the Loan Term (T) in days. Leave the “Finance Charge (F)” field blank and click “Calculate.” The result will show you the exact fee in dollars for that loan.