1. What is a Payday Loan Calculator?

The Payday Loan Calculator helps you understand the true cost of a payday loan, including the impact of making extra payments. Payday loans typically have very high interest rates (often 400% APR or more) and short terms.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (APR/12)
• \( n \) — Number of months
• \( PMT \) — Monthly payment amount

Extra Payments: The calculator also shows how additional payments can reduce both the total interest paid and the loan term.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce the total interest paid on high-interest payday loans, potentially saving hundreds or thousands of dollars.

4. Using the Calculator

Tips: Enter the loan amount, APR (typically 300-500% for payday loans), loan term in months, and any extra payment you can afford. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why are payday loan APRs so high?
A: Payday loans are short-term, unsecured loans with high default rates, leading lenders to charge very high interest to offset risk.

Q2: How much can I save with extra payments?
A: Savings depend on the loan amount, APR, and extra payment amount. Even $10-20 extra per month can make a significant difference.

Q3: Are there alternatives to payday loans?
A: Yes! Consider credit union loans, payment plans with creditors, or borrowing from family/friends before using payday loans.

Q4: What happens if I can't repay my payday loan?
A: You may face additional fees, collection calls, or even legal action. Many borrowers end up taking new loans to repay old ones, creating a cycle of debt.

Q5: How accurate is this calculator?
A: It provides accurate estimates based on the inputs, but actual loan terms may vary slightly depending on the lender's specific policies.