How the payday loan calculator works
Enter the amount borrowed, the fee the lender quotes and the number of days until repayment. The tool then shows the annual percentage rate, the total to repay and, if rollovers are added, the cumulative fees paid before the original principal is finally cleared.
The APR formula behind the numbers
The calculation divides the fee by the amount borrowed, multiplies by 365 and divides by the loan term in days. A 45 dollar fee on 300 dollars for 14 days gives 0.15 times 26.07, which comes to an APR of about 391 percent.
Why the term length matters so much
The same flat fee produces very different rates depending on duration. A 15 percent fee over 31 days works out near 177 percent APR, while the identical fee over seven days exceeds 780 percent, which is why short terms deserve particular scrutiny when comparing offers.
Worked example with rollovers
Suppose 400 dollars is borrowed at 15 dollars per 100 for two weeks. Paying only the 60 dollar fee and renewing four times means 300 dollars in charges over ten weeks, while the full 400 dollars is still owed at the end.
State rules that change the result
US payday lending is regulated mainly by the states, so the legal fee ceiling, maximum loan size and rollover limits depend on where the borrower lives. Online lenders must generally follow the law of the borrower's state, not the state where the company is registered.
| State | Maximum loan | Fee or rate limit | Notable rule |
|---|---|---|---|
| California | $300 face value | Fee up to 15% of the face value | No rollovers allowed |
| Florida | $500 | 10% fee plus a $5 verification charge | One loan at a time, tracked in a state database |
| Washington | $700 or 30% of gross monthly income | Tiered fee schedule | No more than eight loans in twelve months |
| Ohio | $1,000 | Total costs capped at 60% of principal (2019 law) | Minimum term rules apply |
| Colorado | No classic payday product | 36% APR cap (2019) | Voter-approved initiative |
| Illinois | No classic payday product | 36% APR cap (2021) | Predatory Loan Prevention Act |
| New York | Not permitted | Civil usury limit of 16% | Payday lending effectively banned |
Restrictive states and the 36 percent benchmark
Roughly twenty states plus the District of Columbia either ban payday loans or cap small-loan rates at around 36 percent. In those places the calculator still helps, because any offer showing a far higher APR signals an unlicensed lender operating outside the law.
Permissive states with high fees
States such as Texas, Nevada and Utah impose few practical limits on fees, so APRs above 400 percent remain common. Comparing several licensed lenders there can produce large savings, because prices for an identical loan vary widely from one company to another.
Database checks and cooling-off periods
Several states require lenders to check a central database before lending, to enforce limits on simultaneous loans. Others impose a waiting period between loans or offer a free extended payment plan, which can be requested before default and turns a lump sum into instalments.
Comparing payday loans with other small-dollar credit
A fair comparison puts every option on the same footing: total dollars repaid and APR over the same period. The ranges below are typical, not quotes, and an actual offer will depend on the lender, the state and the applicant's history.
- Payday loan, two weeks, 15 dollars per 100: about 391 percent APR.
- Credit union payday alternative loan: maximum 28 percent APR plus an application fee of no more than 20 dollars.
- Credit card cash advance: often 25 to 30 percent APR plus a cash fee of 3 to 5 percent.
- Bank overdraft fee on a small balance: a single 35 dollar charge on 100 dollars repaid in a week exceeds 1,800 percent APR.
- Licensed instalment lender in a 36 percent state: capped at roughly 36 percent APR.
Reading a lender's disclosure correctly
The Truth in Lending Act requires lenders to show the APR and the finance charge in a standard box before signing. If those figures differ from the calculator's result, the gap usually comes from fees missing from the advertised price.
Common input mistakes in the calculator
The most frequent error is entering the amount received rather than the amount owed, or counting business days instead of calendar days. Both inflate or deflate the APR, so the loan agreement itself should be the source for every number entered.
Using the result to negotiate or walk away
A clear APR figure is useful leverage. Some lenders reduce the fee or extend the term when shown a cheaper rival offer, and anyone who sees the true annual cost is better placed to choose a credit union loan or payment plan.
Step-by-step comparison of payday offers
A structured approach takes about twenty minutes and can save hundreds of dollars over a few months. The order matters, because the licence check comes first and removes illegal lenders before any personal information is shared with them.
- Look up the lender on your state financial regulator's licence search.
- Write down the amount owed, the fee and the exact due date for each offer.
- Run every offer through the calculator and note APR and total repayment.
- Add a rollover scenario to see the cost if repayment slips by one cycle.
- Compare against a credit union alternative or a payment plan from the bill provider.
- Choose the lowest total cost that fits the budget, or decide not to borrow.
Red flags in payday comparisons
Some offers look cheap only because key information has been left out of the advert. These warning signs suggest that the price is misleading, or that the lender is not legitimate and should be avoided entirely.
- A request to pay a fee by gift card, wire transfer or crypto before funding: lawful payday lenders never collect advance fees, so this is a scam.
- No APR shown anywhere, only a flat fee.
- A lender based offshore that ignores your state's rate cap.
- Pressure to accept within minutes or lose the offer.
- Automatic renewal written into the agreement by default.
Federal rules that sit above state law
The Military Lending Act caps the cost of credit for active-duty members and dependants at 36 percent, and the CFPB supervises larger payday companies. Federal law does not set a general payday rate cap for civilians, which is why state rules remain decisive.
Where complaints go
Complaints about a payday lender can be filed with the state regulator, the state attorney general and the Consumer Financial Protection Bureau. Including the loan agreement, payment history and the calculator output helps show exactly how charges compare with what was promised.
What APR should a payday loan have?
In states that allow classic payday lending, APRs of 300 to 600 percent are typical for two-week loans. In 36 percent states, anything far above that level points to an unlicensed lender, and the loan may be void or unenforceable under that state's law.
Is the calculator result legally binding?
No. It is an estimate based on the figures entered. The binding numbers are those in the signed agreement and its Truth in Lending disclosure, which must include every mandatory fee charged as a condition of receiving the loan.
Can a payday loan be cheaper than an overdraft?
Occasionally, for a very small and very short shortfall, a single overdraft fee can cost more than a payday fee. The comparison only holds for one cycle, though, and repeated borrowing quickly makes both options far more expensive than a credit union loan.
Do online lenders follow the borrower's state law?
They should. Licensed online lenders apply the rules of the state where the borrower lives, while tribal or offshore lenders sometimes claim exemption. Courts and regulators have repeatedly challenged those claims, so a licence check is always worthwhile before borrowing.
Payday loan cost calculator
Enter the amount, the fee charged per $100 and the loan term to see the total cost and the equivalent APR.
Useful organisations and resources
- Pew Charitable Trusts: state payday loan regulation and usage rates — Research report classifying states as permissive, hybrid or restrictive and comparing borrowing levels between them.
- NCUA board paper on payday alternative loans (PAL I) — Regulator document on the original credit union payday alternative loan, a lower-cost benchmark for comparison.
- Consumer Finance Monitor: NCUA proposes second payday loan option — Summary of the proposal that became PAL II, with larger amounts and longer terms.
Official and legal references
- National Consumer Law Center 50-state survey — Survey of state rate caps on small loans, useful for checking the rules in a given state.
- American Banker: state regulators and the CFPB payday rule — Report on how state regulators viewed the federal rule and its interaction with state law.
- American Banker: what to expect from the CFPB on payday lending — Background on federal oversight of payday lenders and the main policy debates.