⚠️ Consumer-protection notice — read before borrowing
Storefront payday loans are one of the most expensive forms of consumer credit in the United States. The Consumer Financial Protection Bureau's 2013 study of the market found the median fee is $15 per $100 borrowed for a 14-day term — equivalent to a 391% APR. A CFPB follow-up in 2014 documented that roughly 80% of payday loans are rolled over or re-borrowed within 14 days, and the Pew Charitable Trusts' 2012 field research found the average borrower spends $520 in fees each year to repeatedly borrow $375.
Before using this tool, please consider the safer alternatives section below — most people who use payday loans qualify for lower-cost credit-union PALs (28% APR cap), employer pay-advance programs, or nonprofit credit counseling.
Payday Loan Financial-Situation Calculator
This tool models your overall debt-to-income position — a truer picture of whether a short-term loan will actually help than a single-loan cost estimate. Enter your total debt, monthly income, and expenses for a disposable-income and DTI summary.
Results
How the true cost of a payday loan is calculated
A payday loan's headline "fee" hides its real annualized cost. Two calculations matter:
- Finance charge: the dollar fee you pay. A typical storefront charges $15 per $100 borrowed, so a $300 loan costs $45 in fees.
- APR (annual percentage rate): the finance charge expressed as an annual interest rate, using the formula APR = (finance charge ÷ loan amount) × (365 ÷ term days) × 100. A $15-per-$100 fee on a 14-day term calculates to (0.15) × (365 ÷ 14) × 100 = 391% APR. The Truth in Lending Act (TILA, 15 U.S.C. §1601 et seq.) requires lenders to disclose both figures in writing before you sign.
For context, credit-card APRs are typically 15%–30%, personal-loan APRs from banks and credit unions run 6%–36%, and the Military Lending Act caps covered credit at 36% APR for active-duty servicemembers.
What the federal data shows about the payday-loan "debt trap"
- Rollovers are the norm, not the exception. The CFPB's 2014 Data Point: Payday Lending analysis of 12 million loans found roughly 80% were rolled over or re-borrowed within 14 days, and about half were part of a sequence of ten or more consecutive loans.
- Average annual cost dwarfs the loan. The Pew Charitable Trusts' 2012 Payday Lending in America report followed real borrowers for a year and found the typical customer took 8 loans of $375, spent $520 in fees, and was in debt for 5 months of the year.
- Bank-account harm compounds the cost. The CFPB's 2016 Online Payday Loan Payments study found that half of online-payday-loan borrowers incurred an average of $185 in bank overdraft or NSF fees after failed ACH debit attempts by the lender.
- Vehicle-title borrowers frequently lose their cars. The Pew Charitable Trusts' 2015 Auto Title Loans report found 1 in 5 single-payment title-loan borrowers eventually loses their vehicle to repossession.
State legality and interest-rate caps
Payday-loan legality varies dramatically by state. The National Consumer Law Center's state rate-cap survey categorizes them as follows:
- Effectively prohibited (36% APR cap or lower on small-dollar loans, or explicit ban): Arizona, Arkansas, Colorado, Connecticut, Georgia, Illinois (as of 2021), Maryland, Massachusetts, Montana, Nebraska (as of 2021), New Hampshire, New Jersey, New Mexico (as of 2023), New York, North Carolina, Pennsylvania, South Dakota, Vermont, West Virginia, and the District of Columbia.
- Permitted with fee/term limits: most remaining states permit two-week single-payment payday loans under state small-loan or deferred-presentment statutes, with allowable fees ranging from roughly $10–$30 per $100 borrowed and rollover restrictions that vary widely.
- No effective cap: Delaware, Idaho, Nevada, Texas (via credit-services-organization loophole), Utah, and Wisconsin permit fees that translate to 500%+ APRs.
Check your state attorney general or state banking regulator for current terms before signing anything. Tribal and offshore online lenders sometimes claim exemption from state law — those claims are frequently disputed; the CFPB, FTC, and multiple state AGs have brought enforcement actions.
Safer alternatives regulators actually recommend
- NCUA Payday Alternative Loans (PALs I & II). Federal credit unions may offer PAL loans of $200–$2,000 for terms of 1–12 months, capped at 28% APR with a maximum $20 application fee (12 C.F.R. §701.21(c)(7)(iii)). Find a participating credit union at mycreditunion.gov.
- Employer earned-wage-access (EWA) and paycheck-advance programs. Many employers now offer no-fee or low-fee advances on wages you have already earned. Ask HR — most people qualify and never think to.
- Nonprofit credit counseling. NFCC-certified agencies (National Foundation for Credit Counseling) offer free budget counseling and can enroll you in a Debt Management Plan that consolidates unsecured debt at reduced interest rates. Find one at nfcc.org.
- Community-action agencies and 211. Dial 2-1-1 or visit 211.org to reach local emergency-assistance networks that can help with rent, utilities, medical bills, and food — many of the expenses payday loans are used for.
- Hardship deferrals with your existing creditors. Most utilities, medical providers, credit-card issuers, and landlords have formal hardship programs. Asking directly is nearly always cheaper than a payday loan.
- Small-dollar bank loans. Several major banks (Bank of America Balance Assist, U.S. Bank Simple Loan, Wells Fargo Flex Loan) now offer small-dollar installment loans capped at 36% APR to existing customers.
Your rights if you are already dealing with a payday lender
- Revoke ACH authorization. Under the Electronic Fund Transfer Act (Regulation E), you may revoke a lender's authorization to debit your account by notifying your bank in writing at least three business days before the scheduled debit. The lender still owes the debt, but you regain control of the payment method.
- Stop abusive collection calls. The Fair Debt Collection Practices Act (15 U.S.C. §1692 et seq.) prohibits third-party debt collectors from calling before 8 a.m. or after 9 p.m. local time, contacting you at work after being told to stop, or making threats of arrest for unpaid debt. Send a written cease-communication request.
- File a complaint. The CFPB accepts and forwards consumer complaints at consumerfinance.gov/complaint; most lenders respond within 15 days. Your state attorney general and state banking or financial-services regulator are additional avenues.
- Military Lending Act protection. Active-duty servicemembers and their dependents are entitled to a 36% Military APR cap on most consumer credit; a lender violating this cap forfeits the entire finance charge and is subject to civil penalties.
Sources
- Consumer Financial Protection Bureau. Payday Loans and Deposit Advance Products: A White Paper of Initial Data Findings. April 24, 2013. consumerfinance.gov/data-research/research-reports/payday-loans-and-deposit-advance-products/
- Consumer Financial Protection Bureau. CFPB Data Point: Payday Lending. March 25, 2014.
- Consumer Financial Protection Bureau. Online Payday Loan Payments. April 20, 2016.
- Pew Charitable Trusts. Payday Lending in America: Who Borrows, Where They Borrow, and Why. July 2012.
- Pew Charitable Trusts. Auto Title Loans: Market Practices and Borrowers' Experiences. March 2015.
- National Consumer Law Center. State Rate Caps for $500 and $2,000 Loans. Updated 2024.
- NCUA. Payday Alternative Loan (PAL) rule, 12 C.F.R. §701.21(c)(7)(iii).
- Truth in Lending Act, 15 U.S.C. §1601 et seq.; Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq.; Military Lending Act, 10 U.S.C. §987.
Related CalcLeap calculators
- Debt-to-Income Ratio Calculator — a broader look at debt affordability
- Personal Loan Calculator — compare installment-loan APRs and totals
- Title Loan Calculator — sibling YMYL page with vehicle-repossession-risk framing
- Credit Card Payoff Calculator — model paying off revolving debt
- Emergency Fund Calculator — the long-term way to avoid ever needing a payday loan
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