 TITLE: What Is a Payday Loan and How Does It Work? CONTENT: What Are the Costs of a Payday Loan?\n------------------------------------\nThe costs associated with payday loans are set by state laws with fees ranging from $10 to $30 for every $100 borrowed. A two-week payday loan usually costs $15 per $100.\nFor example, let's say you borrow $100 for a two-week payday loan and your lender is charging you a $15 fee for every $100 borrowed. That is a simple interest rate of 15%. But since you have to repay the loan in two weeks, that 15% finance charge equates to an APR of almost 400% because the loan length is only 14 days. On a two-week loan, that daily interest cost is $1.07.\nIf the loan term were one year, you would multiply that out for a full year—and borrowing $100 would cost you $391. Your lender must disclose the APR before you agree to the loan. While it's typical to see an APR of 400% or higher, some payday loans have carried APRs as high as 1,900%. By comparison, APRs on credit cards typically range from 12% to 30%. END