How APR works on a cash advance
APR turns any combination of fees and interest into one yearly number, so offers with different terms can finally be compared fairly. Here's how to read it and how to calculate it yourself.
APR, or annual percentage rate, is the yearly cost of a loan including interest and most required fees. A $15 fee on $100 for 14 days equals 390% APR. Lenders must show APR in writing before you sign, and lenders in the GridMoney network offer 5.99% to 35.99%.
What APR is
The annual percentage rate is what a loan costs over a full year, expressed as a share of the amount you borrow. It folds in interest and most fees you must pay to get the loan, so a flat-fee loan and a monthly-rate loan can be lined up side by side.
APR versus interest rate
Interest rate
The cost of borrowing the principal, and nothing else.
APR
Interest plus required fees like origination, as one yearly rate. Always equal to or higher than the interest rate.
Do the math once
For a single-payment loan, divide the fee by the amount, then scale it to a year.
Turning a $15 fee into an APR
26 two-week periods in a year
Fee to APR converter
Enter any short-term loan's amount, total cost and length.
Simple approximation for single-payment loans: (cost ÷ amount) × (365 ÷ days). For installment loans, use the payment calculator.
APR on common borrowing options
| Example | APR |
|---|---|
| Payday loan: $15 fee on $100 for 14 days | About 391% |
| Car title loan: $25 fee on $100 for 30 days | About 304% |
| Credit union PAL (federal cap) | 28% maximum |
| Installment: $1,500 at 24.99% interest, no fee | 24.99% |
| Same loan with a 5% origination fee ($75) | About 35.16% |
| GridMoney network range | 5.99% to 35.99% |
Notice how the same interest rate produces a higher APR once a fee is added. That's exactly why APR is the number to compare.
Using APR to compare offers
- Line up the same amount and term. Then the APR difference is the true price difference.
- Check the total of payments. A lower APR over a longer term can still cost more in dollars.
- Read the fees outside APR. Late and returned-payment fees only apply if something goes wrong.
- Walk away if there's no APR. A lender that won't show it before you sign isn't one to trust.
Common questions
What does APR include?
APR combines interest with most required fees, such as origination fees, and expresses the total as a yearly percentage. That's why it's the fairest number for comparing loans.
Is APR the same as the interest rate?
No. The interest rate covers interest only. APR adds required fees, so it's equal to or higher than the interest rate.
Must lenders show me the APR?
Yes. The federal Truth in Lending Act requires lenders to disclose the APR, finance charge, amount financed and total of payments in writing before you sign.
What's a reasonable APR?
Lower is better. Many consumer advocates use 36% as an affordability ceiling, matching the Military Lending Act cap for servicemembers. Lenders in our network offer 5.99% to 35.99%.
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