What Is The Apr Of A Payday Loan For $1100 Due In 5 Days That Charges A $165 Fee?

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To calculate the Annual Percentage Rate (APR) of a payday loan, you need to consider the loan amount, the fee charged, and the term of the loan.

Given:

  • Loan Amount: $1100
  • Fee Charged: $165
  • Term: 5 days

First, let's calculate the total repayment amount, which includes both the loan amount and the fee:

Total Repayment Amount = Loan Amount + Fee = $1100 + $165 = $1265

Now, let's calculate the daily interest charged:

Daily Interest = Fee / Term = $165 / 5 = $33

Next, let's calculate the total interest charged over the term of the loan:

Total Interest = Daily Interest * 365 = $33 * 365 = $12,045

Now, let's calculate the APR using the formula:

APR = (Total Interest / Loan Amount) * 100 = ($12,045 / $1100) * 100 ≈ 1095%

So, the APR of the payday loan is approximately 1095%.

Please note that payday loans often have extremely high APRs due to their short terms and high fees. It's essential to be cautious and explore alternative options if possible, as payday loans can trap borrowers in cycles of debt.

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