Payday Loan Calculator – True Cost and APR of Short-Term Loans
The Payday Loan Calculator reveals the true cost of a payday or short-term loan by calculating the total fee, total repayment, APR equivalent, and daily cost. Enter the borrow amount, fee per ₹100 borrowed, and loan duration in days. See how a seemingly small flat fee translates into an extremely high annualised percentage rate. Useful for anyone evaluating short-term borrowing options or comparing payday loans to alternative financing. Results are for planning and awareness purposes. Consider lower-cost alternatives before taking a payday loan.
Formula
This calculator applies standard financial equations and cash-flow relationships using the provided inputs.
Quick Tip
Adjust one variable at a time to understand payment and total-cost sensitivity.
A payday loan fee looks small. But what does it actually cost per year? Enter the borrow amount, fee, and loan days. See the APR equivalent and daily cost — so you borrow with your eyes open.
Featured Answer
Q: How do I calculate the true cost of a payday loan?
A: Total payday loan cost = borrow amount × (fee per ₹100 ÷ 100). APR equivalent = (total fee ÷ borrow amount) × (365 ÷ loan days) × 100. For a ₹10,000 loan with a ₹20 fee per ₹100 for 14 days: total fee = ₹2,000 and APR = approximately 521%. Use this calculator to see the true annual cost of any payday loan.
How to Use Payday Loan Calculator
- Enter the borrow amount — the total cash amount you want to borrow.
- Enter the fee per ₹100 — the flat fee the lender charges for every ₹100 borrowed.
- Enter the loan duration in days — how many days before the full amount must be repaid.
What is a Payday Loan?
A payday loan is a short-term, high-cost loan typically due on the borrower's next payday. The borrower receives cash now and repays the full amount plus a flat fee within 7 to 30 days.
The fee appears small on the surface. A ₹20 charge per ₹100 borrowed does not sound alarming. But when annualised into an APR, these fees translate into rates of 300%–600% or higher.
This is not a hidden trick — it is simply the mathematics of a flat fee applied over a very short period. A short loan with a flat fee always produces a high APR.
The APR equivalent output makes the true borrowing cost comparable to other financial products like personal loans or credit cards.
Example: Borrow ₹10,000 at ₹20 per ₹100 for 14 days.
| Field | Value |
|---|---|
| Total Fee | ₹2,000 |
| Total Repayment | ₹12,000 |
| APR Equivalent | ~521% |
| Daily Cost | ₹142.86 |
A personal loan at 18% APR for the same amount would cost approximately ₹69 in interest over 14 days — not ₹2,000.
Payday Loans: What That Flat Fee Really Costs Per Year
Why Payday Loan Calculator Matters
Payday loans are marketed around a single number — the flat fee. ₹15 per ₹100. ₹20 per ₹100. It sounds manageable.
But that fee is charged over days, not a year. When you express it as an annual percentage rate — the same way all other loans are priced — the true cost becomes clear. Very clear.
This calculator converts the flat fee into an APR. It lets you compare a payday loan against a personal loan, a credit card, or a salary advance on an equal footing.
How to Calculate Payday Loan APR — Step by Step
- Total fee = borrow amount × (fee per ₹100 ÷ 100).
- Total repayment = borrow amount + total fee.
- Daily cost = total fee ÷ loan days.
- APR = (total fee ÷ borrow amount) × (365 ÷ loan days) × 100.
Real-World Example
Comparing three common payday loan fee structures on a ₹10,000 loan for 14 days.
| Fee per ₹100 | Total Fee | Total Repayment | APR |
|---|---|---|---|
| ₹10 | ₹1,000 | ₹11,000 | ~261% |
| ₹15 | ₹1,500 | ₹11,500 | ~391% |
| ₹20 | ₹2,000 | ₹12,000 | ~521% |
For context, a personal loan at 18% per year on ₹10,000 for 14 days would cost approximately ₹69. A payday loan at ₹15 per ₹100 costs ₹1,500 for the same amount and duration.
Common Mistakes to Avoid
- Comparing only the flat fee amount. Always convert to APR for a meaningful comparison.
- Rolling over the loan. Rolling over a payday loan multiplies the fee. Costs compound very quickly.
- Using a payday loan for recurring expenses. A payday loan is designed for a one-time emergency. Using it repeatedly creates a debt cycle.
- Not checking for cheaper alternatives first. Salary advances, employer loans, and credit cards all typically cost far less.
- Ignoring the total repayment figure. The full repayment amount is what leaves your bank account — not just the fee.
When to Use This Calculator
Use this tool before accepting any payday or short-term loan offer. See the APR first. Compare it against a personal loan from a bank or NBFC.
Also use it to evaluate informal chit funds, salary advance apps, or peer lending platforms that charge flat fees. The APR calculation applies equally to all of them.
For a formal personal loan comparison, the Personal Loan Calculator shows the full cost including processing fees. For standard loan EMI planning, the Loan Payment Calculator is the right tool.
Pro Tips
Total fee — this is the cash cost of borrowing for the loan period. Compare it directly against the cost of a credit card cash advance or personal loan for the same amount and days.
Total repayment — this is the exact amount leaving your account on repayment day. Budget for the full figure, not just the original borrow amount.
APR equivalent — use this to compare all borrowing options on the same scale. A 500%+ APR is a warning signal. Explore alternatives before proceeding.
Daily cost — dividing the fee by days gives the daily interest burden. It is a useful way to think about whether the emergency justifies the daily cost.
Important Assumptions and Limitations
This calculator uses a simple flat-fee APR formula: (fee ÷ principal) × (365 ÷ days) × 100. It does not model compound interest on rolled-over loans. Actual APR may vary by jurisdiction's definition. This tool is for awareness and comparison purposes. Calculation method reviewed against standard consumer lending APR formula references.
Consider lower-cost alternatives before taking a payday loan. High-APR short-term borrowing can create a difficult debt cycle if not repaid promptly.
Frequently Asked Questions
Find answers to common questions about Payday Loan Calculator
A payday loan is a short-term, high-fee loan due on the borrower's next payday. The borrower receives cash now and repays the full amount plus a flat fee in 7 to 30 days. While the flat fee appears small, the annualised cost — the APR — is extremely high. It is typically 300%–600% or more when expressed as an annual interest rate.
APR = (total fee ÷ borrow amount) × (365 ÷ loan days) × 100. For a ₹10,000 loan with a ₹2,000 fee over 14 days: APR = (2,000 ÷ 10,000) × (365 ÷ 14) × 100 = approximately 521%. This calculator applies the formula automatically and shows daily cost alongside APR.
The calculator accurately computes the flat-fee APR for the inputs provided. It uses the standard simple APR formula based on total fee, principal, and loan days. It does not model compounding on rolled-over loans. For multi-cycle or rolled-over payday loans, the true effective cost is even higher than the single-cycle APR shown.
APR equivalent expresses the flat payday loan fee as an annual percentage rate. It allows direct comparison with other borrowing products priced on an annual basis — personal loans, credit cards, and overdrafts. A 500% APR does not mean you pay 500% of the loan. It means the fee, if applied for a full year, would equal 500% of the principal.
Only as a genuine last resort for a one-time emergency when no cheaper alternative is available. Payday loans are very expensive compared to personal loans, credit cards, or employer advances. If you need to borrow repeatedly using payday loans, that is a strong signal to address the underlying financial gap through budgeting or a formal credit product.
Payday and salary advance apps in India typically charge fees of ₹10–₹30 per ₹100 for 7–30 day loans. This translates to APRs of approximately 120%–1,000% depending on the fee and duration. Regulatory clarity around short-term digital lending fees is evolving. Always check the full annualised cost before using any salary advance or payday lending app.
Yes. Rolling over a payday loan — extending it when you cannot repay — multiplies the fees. Each rollover adds another fee on the same principal. The debt grows quickly without the principal decreasing. This is a common oversight among first-time payday loan users. Repay the full amount on the original due date to avoid this pattern.
Shorter loan durations produce higher APRs for the same flat fee. A ₹1,000 fee on ₹10,000 for 7 days gives an APR of ~521%. The same fee for 30 days gives an APR of ~122%. The flat fee does not change. But spreading it over more days lowers the annualised rate. This is why 7-day payday loans carry astronomically high APRs.