1. What is a Payday Loan?

A payday loan is a short-term, high-interest loan typically due on the borrower's next payday. These loans are usually for small amounts and are meant to cover emergency expenses until the next paycheck.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Principal \) — The original loan amount
• \( Interest \) — The cost of borrowing
• \( Total \) — The full amount to be repaid

Explanation: This simple calculation shows the total amount you would need to repay, including both the borrowed amount and the interest charges.

3. Understanding Loan Costs

Details: Payday loans often have very high interest rates compared to other types of loans. It's important to understand the full repayment amount before taking out a loan.

4. Using the Calculator

Tips: Enter the principal amount (the amount you want to borrow) and the interest amount (the cost of borrowing). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is payday loan interest calculated?
A: Interest is typically calculated as a flat fee per $100 borrowed. For example, $15 per $100 for a two-week loan.

Q2: What is the typical APR for payday loans?
A: APRs can range from 300% to 500% or more when annualized, though they're meant to be short-term loans.

Q3: Are there alternatives to payday loans?
A: Yes, alternatives include personal loans, credit card cash advances, borrowing from friends/family, or payment plans with creditors.

Q4: What happens if I can't repay on time?
A: You may face additional fees, collection calls, or the loan may roll over, accumulating more interest and fees.

Q5: Are payday loans regulated?
A: Regulations vary by state. Some states prohibit them entirely, while others limit fees or loan amounts.