Payday lenders quote a fee, but the number that lets you compare loans is the annual percentage rate (APR). Here is how to calculate it yourself.
The Formula
APR = (fee ÷ amount borrowed) × (365 ÷ loan term in days) × 100
Worked Example
You borrow $300 and the fee is $45, repaid in 14 days.
- Fee ÷ amount: 45 ÷ 300 = 0.15
- 365 ÷ 14 = 26.07
- 0.15 × 26.07 × 100 = about 391% APR
Florida Example
Florida allows a maximum fee of 10% of the advance plus a verification fee of up to $5. A $100 advance with the $10 fee over 14 days works out to about 260% APR. See our Florida payday loan guide.
Why the Number Matters
Compare that with a credit union PAL, capped at 28% APR, or a credit card cash advance, which often runs between 25% and 30% plus a fee. A low fee on a very short loan can still be a very high APR.
Use APR to Compare, Then Check the Dollars
Always look at the total repayment as well. That is the amount that must leave your account on the due date.
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Cred Qualify does not guarantee approval. Loan availability, amounts, fees and terms vary by state. Payday loans are meant for short-term needs and are not a long-term financial solution.