Enter the loan amount, term, and fees to view your total repayment and APR. Use it to compare costs and choose smarter borrowing options.
$100 $1,500
Slider increases by $100 each time.
$10 $400
Finance charge shows how much extra you'll pay on top of the borrowed amount
7 days 92 days
Amount paid back
$345
in 30 days
APR 547%
Compare your calculated APR with other options.
Installment loans average 6–36% APR, and credit cards about 23.99%.

What Is a Payday Loan?

A payday loan is a short-term loan that is designed for emergency needs and must be repaid on a borrower’s next payday. Loan amounts usually range from $100 to $1,000, with a common repayment period of 14 to 30 days. Payday lenders typically provide borrowers with a portion of their future paycheck upfront, so these products are also known as cash advance loans.

Read about the difference between cash advances and payday loans.

Payday loans usually have very high interest rates due to increased lender risks associated with bad credit availability and no collateral needed. While they provide quick access to funds with minimal documents, their high cost, combined with short repayment terms, makes them difficult to manage. Therefore, payday loans are strictly regulated and even banned in some states.

Learn about the payday loan status in each state.

How Do Payday Loans Work?

Payday loans can be obtained via non-bank companies that operate both online and in-store. Whatever the method you choose, the payday loan process is known for being simple and straightforward. Applicants usually need to fill out one simple form and provide copies of documents that help lenders check their eligibility and determine the amount and terms they can qualify for. These include:

  • Valid ID and SSN to verify your identity, residency, and age.
  • Proof of income to ensure your paycheck is steady, and you can repay the loan on time.
  • Proof of address to set the terms that meet your local payday loan laws.
  • Bank account details to review your payment history.

Once you complete the form, the lender assesses your risk level and decides on the terms you can get. This process usually involves a soft credit check that bypasses credit bureaus and usually takes about 5 minutes. While most loan providers ignore your credit history, some of them still perform a hard credit check that may negatively impact your FICO rating and your overall financial history. Once the underwriting is done, you will receive a loan decision. 

If approved, you need to read the terms carefully and accept the lender’s offer if the conditions suit you. If you apply at a store, you can get a cash loan against a post-dated check that the lender will cash on the due date. Online loans are typically deposited into your bank account and require lender authorization to automatically collect payments. The funding process is usually fast, so you can expect to receive the funds within 24 business hours after approval.

What Is the Average APR for a Payday Loan?

The cost of a payday loan is usually expressed in a flat fee, which is $10 to $30 for each $100 borrowed. This translates to an APR of 260.71% to 782.14% for a 14-day loan. The average payday loan APR is 391%.

How to Calculate a Payday Loan APR

To calculate an APR for a payday loan, you can use our free payday loan interest rate calculator. The following formula will help you better understand how APR works:

$$
APR = \left( \frac{\text{lender fees}}{\text{loan amount}}
\times \frac{365}{\text{loan term in days}} \right) \times 100
$$

Representative Example

Let’s say you’re going to take out a $500 payday loan for 14 days. A lender charges a fee of $20 for each $100 advanced. Your loan APR will be calculated as follows:

$$
APR = \left( \frac{100}{500} \right) \times \left( \frac{365}{14} \right) \times 100
= 521.43\%
$$

Payday Loan Fees

Besides a finance charge, payday lenders often apply extra fees, making loans even more expensive. Here are some of the most common fees associated with payday loans:

  • Origination fees. This is a fee lenders charge for processing your application.
  • Late fees. If you miss the maturity date, lenders often charge penalties, which may be either a percentage of the due amount or a flat fee.
  • Rollover fees. If you extend your repayment term or transform your loan into a new one with a longer payback period, loan providers are likely to charge you an extra fee.
  • NSF fees.When you do not have enough money in your account balance on the due date, a non-sufficient funds (NSF) fee is typically applied by both the lender and your bank.
  • Prepaid debit card fees. If you receive the loan funds in a prepaid debit card, you may face extra fees associated with money transfers, checking your balance, and using the card.

Risks of Payday Loans and Why Many People Still Use Them

Payday loans are often considered predatory due to their high APRs, short repayment times, and unfair tactics some lenders use to drive borrowers into debt. One of the highest risks that comes with them is a debt trap. If you can’t repay the loan on time, you may be forced to take out a new loan to pay off the previous one. Otherwise, lenders will charge extra fees for late or missed payments, making your loan even more expensive.

Next comes debt accumulation. The Consumer Financial Protection Bureau reports that four out of five payday loans are renewed or rolled over within 14 days. Each rollover comes with extra fees that apply to the full amount due. This way, many borrowers end up paying more in interest and fees than they initially borrowed.

However, many people still use payday loans due to their convenience, accessibility, and speed. Applicants with bad or limited credit often lack traditional financing options and are forced to rely on payday lenders when unexpected expenses arise. Payday loans are also fast, which means people in emergency situations are more likely to turn to them instead of personal loans with their complicated processes and extensive paperwork.

Low- or No Cost Payday Loan Alternatives

Payday loans can provide emergency assistance, but they do not suit every situation. Here are several alternatives with lower rates, higher loan amounts, and more repayment flexibility:

Installment Loans

With an installment loan, you can split the total cost of borrowing over a set period and repay in fixed monthly payments. At 1F Cash Advance, we offer installment loans of up to $5,000 for 2 to 24 months. Bad credit does not disqualify you from approval.

Payday Alternative Loans (PALs)

PALs are offered by credit unions to substitute high-cost loans and provide longer repayment times. Interest rates are capped at 28%, and bad credit borrowers can qualify. Loan amounts are usually up to $2,000, and the repayment period can be from 1 to 6 or 12 months.

Buy Now, Pay Later (BNPL)

If you need money for a specific purchase, many online services can offer you BNPL options, often on an interest-free basis. This product allows you to split the item’s cost into four bi-weekly installments, with the first one being made upfront. Late payments may involve interest and fees.

Cash Advance Apps

A cash advance app provides employees with a portion of their earned future paycheck, typically at no cost. Loan amounts are usually low, ranging from $50 to $250 or rarely $500. To get a cash advance via an app, you need to install one on your device and link your bank account to your profile. Some apps may charge subscription or express fees for instant deposits.

Check out the newly relaunched 1F Cash Advance app.

Employer Cash Advances

If your employer offers this benefit, you may be able to access a portion of your future paycheck via your HR or a corporate platform, often with no fees applied. The amount you get will be deducted from your next pay.

Family Loans

Borrowing from your family is one of the easiest ways to get a small loan at favorable and flexible terms. The amount you can get depends on how much your loved ones can lend you at the moment. The repayment terms should be clearly set in advance to avoid strain in relationships.

Charities or Nonprofits

Local community services and charity organizations often provide help with necessities for eligible residents. This may include food assistance, medical treatment, childcare, rent, utilities, and more. Dial 211 to learn more about available programs that suit your situation.

Payment Plans

Landlords, utility companies, and even some medical services can provide interest-free payment plans for people who face financial hardships. This way, the bill amount will be broken up into several payments to make it easier to manage. 

How to Get out of a Payday Loan Trap

If you experience problems with payday loan repayment and borrow money repeatedly, here are some good habits that will help you break this debt cycle:

  • Ask for an installment plan. Some lenders may allow you to break your loan into bits in order to help you repay it faster.
  • Seek credit counseling. A professional credit counselor can negotiate with creditors on your behalf and create a realistic debt management strategy.
  • Sell unused items. Platforms like Facebook Marketplace or eBay will help you get extra money for the staff you do not need and use it toward paying off your debt.
  • Build an emergency fund.Make savings a habit, even if you start small. Having an extra $500 for emergencies will prevent you from going into debt when unexpected expenses pop up.
  • Improve your credit. Good credit helps you access more loan options and opens up better borrowing terms, including lower APRs and longer repayment periods. Make your loan and bill payments on time, review your credit reports for mistakes regularly, and decrease your credit utilization. You can also take out a credit builder loan or a secured credit card.