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Learn How To Calculate Interest Rate on Payday Loans

If you need a first/second payday loan please fill this online form. We will try to connect you with a lender instantly.

Before reading this article please understand that payday loans are very high interest rate loans. However that is not the end or beginning of any debate. Whenever you take a payday loan lenders will tell you exactly how much you need to return on the day your loan is due – and exactly that should be your concern. Nothing else. Period. We agree that knowing the interest rate is also important, but far more is the exact amount you will need to shell out to get a payday loan. If you can stick to paying back the loan in time, no law or lender on earth can harass you to pay a dime extra.

If you are comfortable paying back a loan, you should go ahead and take the loan and not bother about the APR that it may throw. What is far more important is that how much this loan can help you to avoid the mess that you may have in your life if you don’t get access to this cash. If you think the fee you payback to the lender is “costlier” than the mess that you may have to face without this cash – you are better off not taking the loan. But if you think the 10 or 20 dollars extra you pay per hundred dollars is worth to avoid a bigger mess – you should go ahead and take the loan irrespective of the annual percentage rate.

However to create a kind of resistance for consumers applying a payday loan and to take informed decision most government in countries where payday loans are legal like Australia, UK and USA have introduced mandatory rules regarding the disclosure of payday loans interest rates. If the lender owns a website and does business through it – at least in the UK and Australia it is mandatory that they mention the APR of their loans in their website.

That is the reason why you will see representative APR disclosed in almost every payday loan website in the UK and Australia.

USA is different though. It is not compulsory to disclose the APR in the website, but an agreement where the rates will be mentioned is compulsory. So if you take a payday loan your lender should tell you the APR.

We have also seen that recently most honest lenders in the US too have started disclosing the APR in their websites. Again this is not mandatory by US financial laws, but the lenders whom we work with do mention it on their websites.

Lenders who are registered members of OLA – Online Lenders Alliance – have to disclose the APR on their websites. We are members of OLA too and thus we mention the rates of loan in our application page. Good news is that 85% of the payday lenders in the US are members of OLA. So you should see the APR mentioned in most US websites as well.

For example if you apply a loan through our application your rates may vary by state, applicant’s information and lenders. For example a $100.00 loan for 14 days could cost $25.00 in fees with an APR of 651.79%. The total amount to payback could be $125.00. This is on the higher side – most lenders who work with us offer much competitive rates.

Some search engines have made it mandatory as well. If the lenders want to advertise their business in Google they will have to mention the APR (annual percentage rate) on their websites or its highly likely that Google will not allow such website to advertise in their Adwords advertising platform.

Here is the link where the above is mentioned:


Also, most lawmakers are of the view that when mortgage lenders, car loan lenders and credit card issuers mention APRs on their loans, payday lenders should also do the same. So what do you do if your lender has not told you about the APR (though that is not legal)? Note that some lenders do not disclose the APR in their terms that they ask you to sign. Maybe they don’t know the laws or they do not want to. Since most people who take loan are least bothered to know the APR – they do not complain about this to the authorities. Some people who do ask are told the APR.

Here we have explained in simple mathematics how you can calculate the APR on your loan. It will help you if you are interested.

When you get a payday loan you should know these three things:

1. Total amount financed. Lets say for example Mr. X gets a loan for $300. (Original amount borrowed).
2. Total finance fee charged by lender. For example if the loan was financed for a fee of $10 per $100 borrowed – the total fee comes to 300/100 = 3*$10 = $30. (i.e. the borrower needs to return 300+30 = $330 to the lender on the due date).
3. Loan financed for how many days. Lets assume Mr. X got the loan for 14 days.

Now lets calculate the APR on this loan.

Step 1: Divide the (Total finance fee ) / by the (Total amount financed)

In our case: 30 / 300 = 0.10

Note: If you only know $ amount per $100 borrowed, you can easily calculate the total finance fee. In our case the fee is $10 per $100 borrowed. You need to divide total amount financed by 100. 300/100 = 3. Multiply this number by amount you pay per $100. 3*10 = $30.

Step 2: Now you need to multiply this number by the number in one year:

0.10 * 365 = 36.50

Step 3: Divide this number (36.50) by the number of days you got the loan for (14).

36.50 / 14 = 2.6071

Step 4: Multiply this number by 100 to get the percentage.

2.6071 * 100 = 260.71%

We have got the results:

A payday loan for $300 with a finance fee of $10 per $100 borrowed for 14 days has an APR of 260.71%.

Note: Readers, if you have any questions or are in doubt please use the comments section below and ask your questions. We will reply for everyone’s benefit.

Thank you for visiting our website. Hope we helped you get a loan.
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