Payday Loan Calculator

What this calculator prices

Straight answer first, because it matters more here than on most pages.

This tool prices a short term instalment loan. You give it an amount, a term in whole months, and an annual interest rate, and it works out a level monthly repayment using the standard amortising formula, then totals what you hand back.

A lot of high cost lending now takes exactly that shape. Lenders who once offered two week single repayment loans increasingly offer three, six and twelve month instalment products instead, and this calculator is the right tool for those.

What it cannot do is the classic version: borrow two hundred until Friday week, pay a flat fee, settle the whole thing in one go. That product is not priced with an annual interest rate and it does not last a whole month, so there is nowhere to enter it here.

If that is what you are looking at, the arithmetic is genuinely simple and it is set out below. You will not need a calculator for it, and the number it produces is worth seeing.

A classic payday loan is a different shape

Almost everything that makes a payday loan a payday loan is structural rather than about the rate.

That last row is the one that gets underestimated. The lender usually holds authorisation to take the money directly, which means repayment is not really a decision you make on the day. It happens, and whatever else was due that week has to give way.

The fee framing matters too. Fifteen on a hundred sounds like fifteen percent, and in a sense it is. But fifteen percent for two weeks is not fifteen percent for a year, and the whole difficulty with these products lives in that gap.

Turning a fee into an APR, by hand

Two steps. Anyone can do this on a phone.

APR = (Fee / Amount borrowed) × (365 / Days of the loan) × 100

The first bracket is what the fee costs as a share of what you got. The second scales that from the actual term up to a year.

Take the standard case. Borrow 100, fee of 15, repay in 14 days.

15 divided by 100 is 0.15. Then 365 divided by 14 is 26.07. Multiply those and times 100, and you get an APR of about 391 percent.

That is not a hostile framing invented by campaigners. It is the Consumer Financial Protection Bureau's own worked example, and their arithmetic runs the same way: a fee of 15 dollars for every 100 borrowed is a simple interest rate of 15 percent, but repaid in two weeks that finance charge equates to an APR of almost 400 percent.

The term is doing all the work. Same fee, longer loan:

Notice the size of the loan makes no difference at all. Fifteen percent for a fortnight is 391 percent annualised whether you borrowed a hundred or five hundred. Only the fee ratio and the number of days move it.

Worth saying plainly that an APR on a two week loan is a slightly odd object. You are not borrowing for a year, so you will not pay 391 percent of anything. What the APR is for is comparison. It is the only way to line this up against a credit card at 30 percent or a bank loan at 14 and see them on the same scale, which is exactly why disclosure law in most countries requires it.

And your lender has to tell you. In the United States the Truth in Lending Act requires the APR and other costs to be disclosed before you agree. The CFPB says outright that if you were not given that information, the lender has broken the law.

Running a short term loan through

Now the product this calculator does handle. Say $10,000 over 3 months at an annual rate of 120 percent.

The monthly rate is 120 divided by 12 divided by 100, which is 10 percent a month. Three instalments.

So three months of borrowing ten thousand costs a little over two thousand. That is twenty and a half percent of what you borrowed, in a quarter of a year.

That last framing is the one to carry around. Percentage rates on short term borrowing are hard to feel. Interest as a share of the amount borrowed is not.

Stretch the same loan and it gets worse quickly. Twelve months at 400 percent turns $10,000 into $41,308 repaid, of which $31,308 is interest. You would hand back more than four times what you received.

One thing to check against your own paperwork: this prices the interest only. Arrangement fees, late payment charges and any insurance bundled in sit outside it, and on high cost lending those can be a large share of the real total. Our personal loan EMI calculator will fold an upfront fee into an effective APR if you have one.

The part that does the damage

Almost nobody is harmed by a single payday loan repaid on time. The harm is nearly always in what happens next.

The loan is due in full on payday. If the whole amount plus the fee goes out at once, the week that follows is short by exactly that much, which is often the same problem that prompted the borrowing. So the loan gets rolled over, or repaid and immediately taken again. A new fee is charged each time.

Follow the arithmetic on a three hundred loan with a forty five fee, rolled five times:

Twelve weeks in, you have paid 270 in fees and you still owe the original 300. The principal has not moved by a single rupee, because none of those payments ever touched it.

This is the structural difference from an instalment loan, and it is why the shape matters as much as the rate. An instalment loan repays itself whether you think about it or not. A single repayment loan does not repay at all until you find the whole amount in one week, and if you could find the whole amount in one week you probably would not have borrowed.

So the honest question before taking one is not whether you can afford the fee. It is whether the week after repayment will be a normal week. If the answer is that it will be short by the amount you just repaid, the loan has not solved anything, it has moved it.

What the Total Interest Cap row is about

The results include two rows that need explaining, since they are not standard on loan calculators.

Total Interest Cap shows the amount you borrowed. Difference shows how much your total interest exceeds that figure, or zero if it does not.

The idea comes from a rule some regulators apply to high cost short term credit: a total cost cap, under which the interest and fees you pay can never exceed one hundred percent of the amount borrowed. Borrow a hundred and you never repay more than two hundred all in, however long things go wrong for.

So the Difference row is a test. Zero means the loan sits inside a hundred percent cost cap. Anything above zero means the interest alone has passed the amount you borrowed.

Two things to be clear about. The calculator reports this, it does not apply it. Nothing is capped, the figures above stand as calculated. And whether any such cap actually protects you depends entirely on where you are borrowing. It is a feature of some regulatory regimes and not others, so check your own rules rather than assuming the row means you are covered.

Used as a rough test, though, it is a reasonable one. If a loan is on course to charge you more in interest than the sum you received, that is a loan several regulators have decided is too expensive to be allowed.

Things worth checking before you borrow

Not a lecture, just the list of things that turn out to be cheaper, in rough order of how often people overlook them.

Ask about a payment plan on the actual bill. If the borrowing is to cover one specific thing, a utility, a hospital bill, a landlord, ask that party first. A great many will spread a payment at no cost, and it never occurs to people to ask.

Check what an existing credit line costs. A credit card cash advance is expensive and is usually still a fraction of 391 percent. An authorised overdraft is often cheaper again. Compare the APRs directly, since that is what they are for.

Ask your employer. Salary advances are more common than people expect, and they normally cost nothing.

Look at a cooperative or credit union. Small short term loans at ordinary rates are exactly what many exist to do, and membership is often easier to get than people assume.

Work out the whole cost before you sign, not the instalment. Use the calculator above, look at the total interest, and divide it by what you are borrowing. If that ratio makes you wince, that is useful information.

And if the borrowing is already in motion and the repayments are not working, that is worth raising with the lender early rather than late. Most have some form of hardship or forbearance process, and it is nearly always more available before a missed payment than after one.

Questions people ask

Can I enter a two week loan?

No, the term field takes whole months with a minimum of one. For a two week fee based loan, use the fee to APR arithmetic above, which needs no calculator.

Where do I enter the fee?

There is no fee field here, this tool prices interest only. If your loan is quoted as a fee rather than a rate, the APR formula above converts it. If it has an upfront fee on top of a rate, our personal loan EMI calculator folds that into an effective APR.

Why do payday APRs look so extreme?

Because an APR annualises, and the loan lasts a fortnight. A fifteen percent charge over two weeks scales to roughly 391 percent over a year. You will not pay that much on a single loan, but it is the only fair way to compare it against other credit.

Does the Total Interest Cap row mean I am protected?

No. It is a comparison against a hundred percent of the amount borrowed, shown for reference. Whether a cost cap actually applies to you depends on your local rules.

Which number should I actually look at?

Total Repayable, and total interest as a share of what you borrowed. The monthly instalment is the number designed to look manageable, and it is the least informative one on the page.

Can I use another currency?

Yes. The labels say rupees but there is no currency in the arithmetic, so enter your own and read the answer in the same units.

References

A note on the sources. The fee to APR conversion and the 391 percent figure are not our framing: both come from the Consumer Financial Protection Bureau's own consumer guidance, worked through in the same steps shown above. The same source sets out that a payday lender is required by law to disclose the APR and other costs before you agree, and what to do if that did not happen. The distinction between an interest rate and an APR, which is what makes any of these comparisons possible, is also the CFPB's. Nothing here is financial or legal advice, and the rules governing short term credit vary a great deal between countries.

1. Consumer Financial Protection Bureau, What is an annual percentage rate (APR) and why is it higher than the interest rate for my payday loan?, including the worked example converting a 15 dollar fee per 100 borrowed over two weeks into an APR of almost 400 percent, and the requirement that lenders disclose the APR before you agree. https://www.consumerfinance.gov/ask-cfpb/what-is-an-annual-percentage-rate-apr-and-why-is-it-higher-than-the-interest-rate-for-my-payday-loan-en-1625/
2. Consumer Financial Protection Bureau, What is the difference between a loan interest rate and the APR?, on the APR as the interest rate plus fees, and on comparing APR against APR rather than against a rate. https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loan-interest-rate-and-the-apr-en-733/
3. Consumer Financial Protection Bureau, Auto loan answers: key terms, on the annual percentage rate as the yearly cost of borrowing including fees, and on amortisation as the process by which each payment splits between principal and finance charge. https://www.consumerfinance.gov/consumer-tools/auto-loans/answers/key-terms/
4. Cornell Law School, Legal Information Institute, Compound interest, Wex legal dictionary, on interest accruing on unpaid interest, which is the mechanism behind rollover costs. https://www.law.cornell.edu/wex/compound_interest