The APR on a $400 payday loan with a $60 fee due in 14 days is 391%. That's the fee turned into a yearly rate so you can compare it with other loans. The fee is 15% of the amount borrowed.
The math
Inputs
| Loan amount | $400 |
|---|---|
| Fee | $60 |
| Due in | 14 days |
| Rollovers | 5 |
| Comparison APR | 28% |
The formula in words
APR = fee ÷ loan amount × (365 ÷ days in the loan term) × 100. It turns a one-time fee into a yearly rate so you can compare it with other loans. Each rollover charges the fee again while the original amount stays owed.
Step by step
| Step | Calculation | Result |
|---|---|---|
| Fee as a share of the loan | $60 ÷ $400 | 15% |
| Periods in a year | 365 ÷ 14 | 26.07 |
| APR | 15% × 26.07 | 391% |
| Period | Days since borrowing | Fees paid so far | Still owed |
|---|---|---|---|
| Original loan | 14 | $60 | $400 |
| Rollover 1 | 28 | $120 | $400 |
| Rollover 2 | 42 | $180 | $400 |
| Rollover 3 | 56 | $240 | $400 |
| Rollover 4 | 70 | $300 | $400 |
| Rollover 5 | 84 | $360 | $400 |
| Option | Cost |
|---|---|
| Payday loan with 5 rollovers | $360 |
| Loan at 28% APR | $25.78 |
Result
- Fee as a share of the loan: 15%
- APR: 391%
- Fees after 5 rollovers: $360
- Still owed after 5 rollovers: $400
- Total repaid if you then pay it off: $760
- Interest on $400 at 28% APR for 84 days: $25.78
Assumptions
- A single-payment payday loan where the fee is the only finance charge.
- Fees and rollover rules are set by state law; some states cap or ban them.
- Federal credit union Payday Alternative Loans (PALs) are capped at 28% APR by the NCUA, which is why 28% is used for comparison.
- These are estimates that show how the math works, not financial, tax or legal advice. Lenders, card issuers and the IRS can calculate slightly differently.
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What 391% APR Actually Means for You
When you see 391%, that's not the total you pay back in a year. It's a way to express the cost of borrowing $400 for 14 days as if you kept that loan for a full year. The fee is $60, which is 15% of the $400 you borrowed. Because the loan is so short, that 15% gets stretched across the year, producing 391%.
In plain terms, you're paying $60 for the use of $400 for two weeks. If you pay it off on time, you repay the $400 plus the $60 fee. That's the best-case scenario. The APR is high because payday loans are designed to be short-term, but the fee is charged every time you renew or roll over the loan.
Compare that to a loan at 28% APR. If you borrowed $400 at 28% for 84 days, you'd pay about $25.78 in interest. That's the kind of difference the APR is meant to highlight. It's not that you'll pay 391% of the loan in fees in two weeks—it's that the fee structure, if repeated over a year, would cost you that rate.
What Drives the Cost Up: Rollovers
The biggest danger with a payday loan is rolling it over. Each rollover charges the $60 fee again, but the original $400 you owe stays the same. After 5 rollovers, you've paid $360 in fees, yet you still owe $400. If you then pay it off, you've repaid $760 total—$400 for the original loan plus $360 in fees.
That's $360 in fees for a $400 loan. The APR stays 391% because the fee and term haven't changed, but your total cost has ballooned. The rollover is what turns a two-week loan into a months-long debt trap.
State laws set the rules on fees and rollovers. Some states cap or ban them. That's why the numbers here are estimates—your lender's rules may differ. Always check your loan agreement and confirm with your lender how rollovers work.
How You Could Change the Outcome
The math shows that paying on time avoids the rollover fees. If you can repay the $400 plus the $60 fee when it's due, you're done. If you can't, the fees stack up fast. One practical step is to ask your lender about a repayment plan or extension before you roll over. Some lenders offer options that don't add the full fee again.
Another option is a credit union Payday Alternative Loan (PAL). These are capped at 28% APR by the NCUA. On $400 for 84 days, that's about $25.78 in interest—far less than the $60 fee for two weeks. Not everyone qualifies, but it's worth checking if you're a credit union member.
If you're already in a rollover cycle, focus on stopping the bleeding. Paying the $400 principal plus any current fee ends the cycle. After 5 rollovers, you've already paid $360 in fees, so paying the $400 to close it out means a total of $760. That's painful, but continuing to roll over adds another $60 each time.
Practical Next Steps
First, confirm the exact fee and due date with your lender. The numbers here assume a $60 fee and a 14-day term. If your loan differs, the APR will change. Second, if you can't pay in full, ask about a payment plan before the due date. Don't wait until you're late.
Third, look for alternatives before you roll over. A small loan from a credit union, a family member, or a payment plan with the lender could cost less than another $60 fee. Fourth, track your total cost. After 5 rollovers, you've paid $360 in fees and still owe $400. That's a clear signal to stop and find another way.
Finally, remember these are estimates, not financial advice. Lenders and credit issuers can calculate slightly differently. For your specific situation, confirm the APR and terms with your lender or a nonprofit credit counselor.
Frequently asked questions
How is the APR calculated on a payday loan?
The APR is the fee divided by the loan amount, multiplied by 365 divided by the days in the loan term, times 100. For a $400 loan with a $60 fee due in 14 days, that's 391%. It turns a one-time fee into a yearly rate for comparison.
What happens if I roll over the loan?
Each rollover charges the $60 fee again while the original $400 stays owed. After 5 rollovers, you've paid $360 in fees and still owe $400. If you then pay it off, you've repaid $760 total. Rollovers increase your total cost without reducing the principal.
Is 391% APR legal?
Payday loan fees and rollover rules are set by state law. Some states cap or ban them. The 391% figure is an estimate based on the given fee and term. Check your state's rules and your loan agreement to know what applies to you.
How does a 28% APR loan compare?
A $400 loan at 28% APR for 84 days would cost about $25.78 in interest. That's far less than the $60 fee for a 14-day payday loan. The 28% figure is used because federal credit union Payday Alternative Loans are capped at that rate by the NCUA.
What can I do if I can't repay on time?
Ask your lender about a repayment plan or extension before the due date. Some lenders offer options that don't add the full fee again. Also consider a credit union Payday Alternative Loan if you qualify. Stopping the rollover cycle is key to limiting the total cost.