Use this payday loan APR calculator to annualize short-term fees, estimate rollover cost and total amount due, or find a fee for a target APR.
Payday Loan APR Formula
The simple annual percentage rate for a short-term single-payment loan is:
APR = (F / P) * (365 / d) * 100
For identical renewals, total fees are:
F_total = F * (R + 1)
Variables:
- F is the finance charge for one loan term
- P is the amount borrowed
- d is the term in days
- R is the number of renewals or rollovers
- APR is the simple annualized percentage rate
Because the term is short, even a modest dollar fee can translate into a very high APR. Renewing the same loan does not reduce principal in this model; it adds another finance charge and another term. Target-APR mode rearranges the first formula to find the maximum finance charge for the selected amount and number of days.
Payday Loan Fee and APR Reference
This table shows why the fee per $100 and the number of days are both important. The examples use a 14-day term.
| Fee per $100 | 14-day finance charge on $300 | Simple APR | Amount due on $300 |
|---|---|---|---|
| $10 | $30 | 260.7% | $330 |
| $15 | $45 | 391.1% | $345 |
| $20 | $60 | 521.4% | $360 |
| $30 | $90 | 782.1% | $390 |
Example Problems
Example 1: Calculate a two-week loan APR.
You borrow $300 and pay a $45 finance charge after 14 days. APR = ($45 ÷ $300) × (365 ÷ 14) × 100, or about 391%. The amount due after one term is $345.
Example 2: Include two rollovers.
The original term plus two renewals equals three loan cycles. At $45 per cycle, total fees become $135 and the amount needed to clear the original $300 balance becomes $435. The simple APR for each identical cycle remains about 391%, but the dollar cost keeps rising.
Frequently Asked Questions
Why is the APR so much higher than the fee percentage?
The fee is charged for only a few days. APR annualizes that short-period cost over 365 days, making it easier to compare with longer-term credit.
Does a rollover reduce the principal?
In the calculator’s rollover model, it does not. The borrower pays another fee to extend the due date and still owes the original principal. Actual state rules and loan terms vary.
Is the compounded annual equivalent a likely one-year cost?
It is a mathematical comparison showing repeated compounding at the same short-term rate. It is not a prediction that the loan will legally or practically renew for an entire year.
