Payday Loan Calculator

What is a Payday Loan Calculator?

A Payday Loan Calculator is a financial tool designed to help borrowers estimate the total cost of a short-term, high-interest loan, typically due on their next payday. It calculates the fee amount, total repayment, and Annual Percentage Rate (APR) based on the loan amount, fee rate, and loan term.

The Payday Loan Calculation Formulas

The main formulas used in payday loan calculations are:

1. Fee Amount: \(F = L \times R\)
2. Total Repayment: \(T = L + F\)
3. APR: \(APR = \frac{F}{L} \times \frac{365}{D} \times 100\%\)

Where:

• \(F\) = Fee amount
• \(L\) = Loan amount
• \(R\) = Fee rate (as a decimal)
• \(T\) = Total repayment
• \(D\) = Loan term in days

Step-by-Step Payday Loan Calculation

1. Calculate the fee amount by multiplying the loan amount by the fee rate.
2. Determine the total repayment by adding the loan amount and the fee.
3. Calculate the APR using the formula above, which accounts for the short-term nature of payday loans.

Example Calculation

Let's calculate the costs for a $500 payday loan with a 15% fee for 14 days:

1. Fee Amount: \(F = 500 \times 0.15 = $75\)
2. Total Repayment: \(T = 500 + 75 = $575\)
3. APR: \(APR = \frac{75}{500} \times \frac{365}{14} \times 100\% = 391.07\%\)

Visual Representation

This chart shows the proportion of principal ($500) to fee ($75) for the example payday loan.