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What is the interest rate (APR) on payday loans?

It varies.

Let's start with a definition of APR From Wikipedia:

Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way the rate is expressed. The aim of using APR is to calculate a total cost of borrowing. APR is intended to make it easier to compare lenders and loan options.

Because APR is calculated on a case-by-case basis, it is impossible to directly answer this question. All payday lenders have different contract terms so the payday loan length and dollar amount can vary widely. (To further complicate the issue, the outcomes of APR calculations can vary based on the exact equasion used in the calculation.)

It is agreed, however, that payday loan APRs are very, very high when compared to other APRs.

Below, we've included a table to show sample APRs and fees on different loan amounts.

APR rate sample for a hypothetical payday loan
    Loan amount
Loan
Term
(Days)
Annual
Percentage
Rate (APR)
$100 $150 $200 $250 $300 $350 $400

    Total fees owed per payday, assuming $30 fee per $100 loaned
4   2737.50% $30 $45 $60 $75 $90 $105 $120
5   2190.00% $30 $45 $60 $75 $90 $105 $120
6   1825.01% $30 $45 $60 $75 $90 $105 $120
7   1564.29% $30 $45 $60 $75 $90 $105 $120
8   1368.76% $30 $45 $60 $75 $90 $105 $120
9   1216.67% $30 $45 $60 $75 $90 $105 $120
10   1095.00% $30 $45 $60 $75 $90 $105 $120
11   995.46% $30 $45 $60 $75 $90 $105 $120
12   912.51% $30 $45 $60 $75 $90 $105 $120
13   842.31% $30 $45 $60 $75 $90 $105 $120
14   782.15% $30 $45 $60 $75 $90 $105 $120
15   730.01% $30 $45 $60 $75 $90 $105 $120
16   684.38% $30 $45 $60 $75 $90 $105 $120
17   644.12% $30 $45 $60 $75 $90 $105 $120
18   608.34% $30 $45 $60 $75 $90 $105 $120
19   576.32% $30 $45 $60 $75 $90 $105 $120
20   547.51% $30 $45 $60 $75 $90 $105 $120
21   521.43% $30 $45 $60 $75 $90 $105 $120
22   497.73% $30 $45 $60 $75 $90 $105 $120
23   476.09% $30 $45 $60 $75 $90 $105 $120
24   456.26% $30 $45 $60 $75 $90 $105 $120
25   438.01% $30 $45 $60 $75 $90 $105 $120
26   421.16% $30 $45 $60 $75 $90 $105 $120
27   405.56% $30 $45 $60 $75 $90 $105 $120
28   391.08% $30 $45 $60 $75 $90 $105 $120

Next Tip

What is a payday loan? How is it different from other credit?

Related Tips

How do payday loan companies make money? | How much more expensive is a payday loan than other credit? | What is the best kind of payday loan?

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