How the UK price cap works
Since 2 January 2015 the FCA has capped what a lender can charge on high-cost short-term credit. Interest and fees together cannot exceed 0.8% of the credit outstanding for each day (CONC 5A.2.3R). Together they also cannot exceed the amount you borrowed (CONC 5A.2.2R), so you never repay more than double. Interest is simple: it is never charged on interest that has already built up (CONC 5A.2.19R).
A £300 loan repaid after 30 days costs £72.00 in interest at 0.8% a day, which is £2.40 a day, so you repay £372.00. That is 24.00% of the amount borrowed, or £24 for every £100.
Worked example: a late payment
Take £200 borrowed for 20 days. Paid on time you repay £232.00. Suppose you pay 10 days late and the lender charges the £15 late fee. The unpaid £200 builds £16.00 more interest at 0.8% a day, the fee is £15.00 and interest on that fee is £1.20. The total to repay is £264.20.
The rules limit all default charges to £15 in total, and interest on the fee to 0.8% a day (CONC 5A.2.14R). The calculator counts the fee and its interest towards the 100% limit on total cost, because the rule that takes default charges out of the daily cap does not take them out of the total cost cap. The late days and fee stop growing once the total reaches the amount borrowed.
Paying in instalments
Some lenders offer several payments. Borrow £300 and repay it in 3 equal payments 30 days apart. Each payment is £151.42, the total is £454.25 and the interest is £154.25. That is lower than the £72.00 of one payment because each payment reduces the balance that interest is charged on.
The calculator spaces payments by the number of days you enter, so a calendar month of 31 days costs a little more than the 30 days used here. Check the dates in your agreement.
Why the APR looks so large
The effective APR for the £300, 30-day loan is 1,269.72%. A lender must quote an APR even for a very short loan, and the figure assumes the same borrowing repeats for a full year, which a payday loan rarely does. Multiplying the daily rate by 365 gives a simple yearly rate of 292.00%. Look at the pounds you repay first and use the APR to compare with other credit.
What this calculator leaves out
It does not model interest paid at the lender's own day count, different charges on each instalment, or a loan made before 2 January 2015. For early payoff, part payments and rollovers use the payday loan payoff calculator. For a US loan, choose the US page.
For early payoff, part payments and rollovers, use the UK payday loan payoff calculator.
Borrowing in the United States? Open the US payday loan calculator instead.
Inputs for the UK payday loan calculator
Amount borrowed
The loan amount you receive, before any interest or fee.
Daily interest rate
Percent of the amount borrowed charged each day. The legal cap is 0.8%. A higher rate shows a warning.
Days until each payment
With one payment, the days from borrowing to the due date. With several, the gap between payments.
Number of payments
Use 1 for a single payment, or up to 12 equal payments.
Days the last payment is late
Days after the due date before you pay. Enter 0 to see the on-time cost.
Late payment fee
The fee your lender charges for paying late. The legal limit is £15 in total.
CALCULATOR QUESTIONS
UK payday loan calculator questions
How much can a UK payday lender charge?
Interest and fees together are capped at 0.8% of the credit outstanding for each day, and at 100% of the amount borrowed in total (CONC 5A.2.2R and 5A.2.3R). A £300 loan for 30 days costs at most £72 in interest.
What happens if I pay a payday loan late?
A lender may charge up to £15 in default charges in total, plus interest of no more than 0.8% a day on the unpaid amount and on that charge. In the £200 example above, paying 10 days late adds £16.00 of interest and the fee to give £264.20 in total.
How many times can a payday loan be rolled over?
A firm may not refinance high-cost short-term credit more than twice (CONC 6.7.23R), apart from forbearance. The payday loan payoff calculator lets you add up to two rollovers.
Why is the APR different from the daily rate?
The daily rate is simple interest on the balance, 292.00% a year when multiplied by 365. The APR is an effective annual rate that compounds, so the same loan shows 1,269.72%.