Loans & Credit

What Is a Payday Loan?

A payday loan is a small, short-term loan, typically due on the borrower’s next payday, usually about two to four weeks later. Instead of a traditional interest rate, lenders often charge a flat fee per amount borrowed, which translates into a very high APR. Rules and limits vary widely by state and country.

Calculating the APR

According to the US Consumer Financial Protection Bureau, a typical fee of 15 per 100 borrowed for two weeks equals an APR of almost 400%.

Rollovers

If the loan cannot be repaid on time, it may be renewed for another fee, which can increase the total cost quickly.

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🔗 Related Terms

APR (Annual Percentage Rate) Cash Advance Personal Loan

More Loans & Credit Terms

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.