Payday Loan & BNPL True APR Calculator
Example: Loan or BNPL installment amount: 400 $ · Fee per $100 borrowed: 15 $/100 · Loan term (days until repayment): 14 days
| Annualized APR | 391.07% |
| Total fee on this loan | $60 |
| Total repayment amount | $460 |
| Annual cost if rolled over repeatedly | $1,560 |
Worked example
Borrowing $400 for 14 days at $15 per $100 means a $60 fee and $460 total repayment. The annualized APR is 391%. If the borrower cannot repay and rolls the loan over 26 times across a year, the fee cost alone reaches $1,560 — nearly four times the original loan amount. This is why payday lending is the highest-cost legal credit available to consumers, and why alternatives like credit unions, employer advances, or credit card cash advances (even at 28% APR) are almost always cheaper.
Frequently asked questions
How is APR calculated for a payday loan?
APR = (Fee ÷ Loan Amount) × (365 ÷ Loan Term in Days) × 100. Federal law (the Truth in Lending Act) requires payday lenders to disclose the APR for exactly this reason — to make fee-based loans comparable to rate-based ones. The APR is not a trick; it is the standardized way to compare borrowing costs across all loan types.
Are BNPL services actually loans?
Yes. Buy-now-pay-later plans split a purchase into installments and charge late fees (or in some cases interest) when payments are missed. The CFPB has classified BNPL services as credit products subject to some consumer-protection rules, though disclosure requirements still vary by provider.
What are cheaper alternatives to a payday loan?
Alternatives include credit union payday alternative loans (PALs, capped at 28% APR), employer paycheck advance programs (often free), negotiating a payment plan with the creditor you owe, 0% intro credit cards, or borrowing from family. Local non-profit credit counseling agencies can connect you with emergency funds in many communities.
Can I legally avoid rolling over a payday loan?
Some states require lenders to offer an extended repayment plan at no extra fee if requested before the due date. The CFPB has also issued rules around repeated attempts to collect and rollover limits. Regulations vary by state — check your state attorney general's office for local protections.