Why do payday loans have such high fees?
Lenders argue short repayment and high default risk justify high fees. Critics note the loans target people with few alternatives. Many states cap fees at 15-17%; others allow 25%+.
Debt Management
Payday Loan Fee Comparison Calculator
See which of two payday loan offers is cheaper overall based on fees and rollover counts.
Decide Your Short-Term Loan Path
Minimize fees by comparing different fee rates and rollovers.
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What this calculator does
Payday loans are short-term, high-interest loans designed for immediate financial need. Lenders charge $15-25 per $100 borrowed, resulting in APRs of 300-600%+. This calculator compares two loan offers side-by-side, accounting for potential rollovers.
How it works
The calculator multiplies principal by each loan's fee rate, then by rollovers plus one. It calculates effective APR assuming 14-day periods, generates rollover breakdowns showing fee accumulation, and recommends the cheaper option.
Formula
Total Fees = Principal × (Fee Rate ÷ 100) × (Rollovers + 1). Total Repayment = Principal + Total Fees. Effective APR = (Fee Rate ÷ 100) × (365 ÷ 14) × 100. Each rollover multiplies fees without reducing principal.
Tips for using this calculator
- Treat payday loans as true emergencies only—they're extremely expensive
- Avoid rollovers—each doubles or triples your fee burden
- Shop around—fees vary significantly by lender
- Check if your credit union offers payday alternatives at 1/10th the cost
- Build an emergency fund to avoid future payday loans
Frequently asked questions
What happens if I can't repay?
You can typically roll over, paying the original fee again. This is how payday debt spirals—borrowers pay $300 in fees over 3 months on a $300 loan.
Is a payday loan ever the right choice?
In rare true emergencies with no alternatives and certainty of repayment, a single payday loan might be necessary. Better alternatives include family loans, employer advances, or credit union PALs.