Interest from an APR with monthly payments
A US lender charges interest each month at one twelfth of the APR. A $2,000 loan at 29.9% APR over 6 months has a monthly payment of $363.00, interest of $177.99 and a total to repay of $2,177.99. With a term in days the interest is simple, the amount times the APR times the days over 365.
Interest from a flat fee
A payday loan charges a flat percentage of the amount borrowed for one term. A 15% fee on $300 for 14 days is $45.00. The cost as a share of the amount borrowed is 15.00%, and the APR is 391.07%, in line with the CFPB's statement that a two-week loan with a $15 fee per $100 is almost 400 percent APR.
Interest from a rate per day
Some short-term products quote a rate per day. $500 at 1.5% a day for 30 days costs $225.00 in interest, which is $7.50 a day, and works out to an APR of 547.50%. There is no federal cap on this for ordinary borrowers, so the limit comes from state law.
Limits and checks
The calculator shows a note when the APR is above 36 percent, the level the Military Lending Act sets for covered service members and dependents (10 U.S.C. 987(b)). The law uses a military APR that counts more charges, so use this as a guide. It does not apply state fee limits.
For rollovers and other fees on a payday loan, use the US payday loan calculator.
For a loan where you pay only interest, use the short-term interest-only loan calculator.
Inputs for the US short-term loan interest calculator
Interest is quoted as
A yearly rate (APR) with monthly payments, a rate per day, or one flat charge for the whole loan.
Loan amount
The amount you borrow.
Yearly interest rate (APR)
The nominal yearly rate, charged monthly at one twelfth of it.
Daily interest rate
Percent of the amount borrowed charged each day.
Flat charge
A percentage of the amount borrowed, charged once for the whole loan.
Loan term
How long you borrow for, in the unit chosen next to it.
Term in
Days or months. A yearly rate with months means equal monthly payments.
CALCULATOR QUESTIONS
US short-term loan interest calculator questions
How do you calculate interest on a short-term loan?
For monthly payments, use the APR divided by 12 as the monthly rate. A $2,000 loan at 29.9% APR over 6 months costs $177.99 in interest.
How do you calculate payday loan interest?
A payday loan charges a flat fee. 15% on $300 is $45.00. The APR scales it to a year: 391.07% for 14 days.
Why is the APR of a short-term loan so high?
The APR expresses the cost for a whole year. A fee charged for two weeks is multiplied by about 26 terms, so a modest-looking fee becomes a very large annual rate.
Is there a US limit on short-term loan interest?
There is no federal cap for ordinary borrowers. States set limits, and the Military Lending Act caps the APR at 36 percent for covered service members and dependents.