The Real APR on a Payday Loan (And Why It's Legal)

A payday loan is usually pitched as a flat fee for a short-term advance — "$15 per $100 borrowed" sounds manageable until it's converted into the annual rate that actually describes it.

The math. A $15 fee on a $100 two-week loan works out to roughly 400% APR once annualized — a figure that would be unthinkable on a credit card, but is standard for payday lending in states that allow it. Renewing or rolling over the loan (common when it can't be repaid on the original date) compounds that cost each cycle.

Why it's legal. Payday lending is regulated at the state level, and rate caps vary enormously — some states effectively prohibit it, others allow rates far beyond what any other consumer credit product could charge. It's legal where it's legal, which doesn't make it cheap.

If a payday or title loan is part of what you're carrying, it's usually worth prioritizing first. See what applies to you with a free, no-obligation check-in.