Payday Loan Calculator
Payday Loan is evaluated from Loan Amount, Fee per $100 borrowed and Loan Term. The calculation reports Total Fee, Total Repayment and Effective APR.
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About the Payday Loan Calculator
### Why Use the Payday Loan Calculator Calculator?
The Payday Loan Calculator is a valuable tool for anyone considering taking out a payday loan. This type of loan can be expensive, with fees and interest rates that add up quickly. By using the Payday Loan Calculator, users can get a clear picture of the total cost of the loan, including the total fee, total repayment, and effective APR. This information is essential for making informed decisions about whether to take out a payday loan and how to manage the debt. With the calculator, users can avoid surprises and make smart financial choices. For example, a user can compare the APR of a payday loan to other types of loans, such as personal loans or credit cards, to determine which option is the most cost-effective.
### History of the Payday Loan Calculator
The concept of payday lending has been around for decades, but the modern payday loan industry began to take shape in the 1990s. At that time, lenders started to offer short-term, high-interest loans to consumers who needed quick access to cash. The industry grew rapidly, with thousands of payday loan stores opening across the United States. As the industry evolved, regulators and consumer advocates began to express concerns about the high costs and predatory practices associated with payday lending. In response, some states implemented regulations to cap interest rates and fees, while others banned payday lending altogether. The Payday Loan Calculator is a relatively recent development, emerging as a tool to help consumers navigate the complex and often confusing world of payday lending. The calculator's formulas and concepts are based on standard financial calculations, such as the APR formula, which has been in use for many years.
### The Science Behind the Calculations
The Payday Loan Calculator uses a set of formulas to calculate the total fee, total repayment, and effective APR of a payday loan. The calculations are based on the following variables: loan amount, fee per $100 borrowed, and loan term (in days). The total fee is calculated by multiplying the loan amount by the fee per $100 borrowed, and then dividing by $100. The total repayment is calculated by adding the loan amount and the total fee. The effective APR is calculated using the following formula: APR = (total fee / loan amount) / (loan term / 365) \* 100. This formula takes into account the fact that the loan term is typically short, and the interest rate is typically high. The daily interest rate is calculated by dividing the APR by 365.
### Real-Life Application and Examples
Let's say John needs to borrow $500 to cover an unexpected car repair. He goes to a payday loan store and is offered a loan with a fee of $15 per $100 borrowed, and a loan term of 14 days. John uses the Payday Loan Calculator to determine the total cost of the loan. He enters the loan amount ($500), the fee per $100 borrowed ($15), and the loan term (14 days) into the calculator. The calculator returns the following results: total fee ($75), total repayment ($575), and effective APR (391%). John is surprised by the high APR and decides to explore other options, such as a personal loan or a credit card, to see if he can find a more cost-effective solution. By using the Payday Loan Calculator, John is able to make a more informed decision about his financial situation and avoid taking on debt that he may not be able to afford.
The Payday Loan Calculator is a valuable tool for anyone considering taking out a payday loan. This type of loan can be expensive, with fees and interest rates that add up quickly. By using the Payday Loan Calculator, users can get a clear picture of the total cost of the loan, including the total fee, total repayment, and effective APR. This information is essential for making informed decisions about whether to take out a payday loan and how to manage the debt. With the calculator, users can avoid surprises and make smart financial choices. For example, a user can compare the APR of a payday loan to other types of loans, such as personal loans or credit cards, to determine which option is the most cost-effective.
### History of the Payday Loan Calculator
The concept of payday lending has been around for decades, but the modern payday loan industry began to take shape in the 1990s. At that time, lenders started to offer short-term, high-interest loans to consumers who needed quick access to cash. The industry grew rapidly, with thousands of payday loan stores opening across the United States. As the industry evolved, regulators and consumer advocates began to express concerns about the high costs and predatory practices associated with payday lending. In response, some states implemented regulations to cap interest rates and fees, while others banned payday lending altogether. The Payday Loan Calculator is a relatively recent development, emerging as a tool to help consumers navigate the complex and often confusing world of payday lending. The calculator's formulas and concepts are based on standard financial calculations, such as the APR formula, which has been in use for many years.
### The Science Behind the Calculations
The Payday Loan Calculator uses a set of formulas to calculate the total fee, total repayment, and effective APR of a payday loan. The calculations are based on the following variables: loan amount, fee per $100 borrowed, and loan term (in days). The total fee is calculated by multiplying the loan amount by the fee per $100 borrowed, and then dividing by $100. The total repayment is calculated by adding the loan amount and the total fee. The effective APR is calculated using the following formula: APR = (total fee / loan amount) / (loan term / 365) \* 100. This formula takes into account the fact that the loan term is typically short, and the interest rate is typically high. The daily interest rate is calculated by dividing the APR by 365.
### Real-Life Application and Examples
Let's say John needs to borrow $500 to cover an unexpected car repair. He goes to a payday loan store and is offered a loan with a fee of $15 per $100 borrowed, and a loan term of 14 days. John uses the Payday Loan Calculator to determine the total cost of the loan. He enters the loan amount ($500), the fee per $100 borrowed ($15), and the loan term (14 days) into the calculator. The calculator returns the following results: total fee ($75), total repayment ($575), and effective APR (391%). John is surprised by the high APR and decides to explore other options, such as a personal loan or a credit card, to see if he can find a more cost-effective solution. By using the Payday Loan Calculator, John is able to make a more informed decision about his financial situation and avoid taking on debt that he may not be able to afford.
Formula & How It Works
The calculation applies the following relations exactly as recorded in the metadata: Total fee = loan amount x (fee per $100 / 100). APR = (fee / principal) / term_days x 365 x 100. Each output field is produced by substituting the supplied inputs into the relevant relation and then applying the declared rounding or text format.
Worked Examples
Example 1: Typical payday loan: $500, $15/100, 14 days
Inputs
loan_amount: 500
fee_per_100: 15
loan_days: 14
Total Fee: $75. Total Repayment: $575. Effective APR: 391.1%. Daily Interest Rate: 1.0714%
With Loan Amount = 500, Fee per $100 borrowed = 15 and Loan Term = 14 as the stated inputs, the result is Total Fee = $75, Total Repayment = $575 and Effective APR = 391.1%. Each value corresponds to the declared output fields.
Example 2: 2-week $300 loan, $20 fee per $100
Inputs
loan_amount: 300
fee_per_100: 20
loan_days: 14
Total Fee: $60. Total Repayment: $360. Effective APR: 521.4%. Daily Interest Rate: 1.4286%
With Loan Amount = 300, Fee per $100 borrowed = 20 and Loan Term = 14 as the stated inputs, the result is Total Fee = $60, Total Repayment = $360 and Effective APR = 521.4%. Each value corresponds to the declared output fields.
Example 3: 30-day installment-style payday loan: $1,000 at $30/100
Inputs
loan_amount: 1000
fee_per_100: 30
loan_days: 30
Total Fee: $300. Total Repayment: $1,300. Effective APR: 365%. Daily Interest Rate: 1%
With Loan Amount = 1,000, Fee per $100 borrowed = 30 and Loan Term = 30 as the stated inputs, the result is Total Fee = $300, Total Repayment = $1,300 and Effective APR = 365%. Each value corresponds to the declared output fields.
Example 4: Bad check alternative: $200 loan, $30/100, 7-day advance
Inputs
loan_amount: 200
fee_per_100: 30
loan_days: 7
Total Fee: $60. Total Repayment: $260. Effective APR: 1,564.3%. Daily Interest Rate: 4.2857%
With Loan Amount = 200, Fee per $100 borrowed = 30 and Loan Term = 7 as the stated inputs, the result is Total Fee = $60, Total Repayment = $260 and Effective APR = 1,564.3%. Each value corresponds to the declared output fields.
Common Use Cases
- Calculate total cost of a payday loan
- Compare payday loan APR to other loans
- Find how much you owe on a 2-week payday loan