How To Calculate The Real Cost Of Your Payday Loan

Payday loans are designed to provide you with help when it comes to a financial emergency. There are a number of lenders available online and with tighter regulations implemented by the FCA, payday loans offer a far more secure and safe way to borrow money. While short-term loans are deemed to be an expensive way of borrowing money, they are useful if you’re searching for a quick and short-term solution, and these should never be relied on in the long term.

Some of the regulations that the FCA have implemented mean that interest rates chargeable per day are capped. In addition to this, there are also caps on the maximum amount of fees and charges that a payday loan lender can place on the loan, which has put an end to unfair lending practices. It is important that when you’re searching for a payday loan, you are able to understand the real cost of how much money you are going to need to pay back. Here at Wizzcash, our online loan calculator can give you all of the information that you need when it comes to borrowing a short-term loan from us. To help you understand the real cost, we’re breaking down what a payday loan really is.

The Structure

Firstly, you’re going to need to understand the structure of a payday loan. These loans are designed to be paid off by the next pay day and are therefore designed to be only used in the short term. While there are other options that can help you spread out the payments like instalment loans, these are nowhere near the length of what a bank would lend – which could be over a number of years. As a result of the shorter term, the loan amounts are generally a lot smaller too – except they do come with various fees.


APR is defined as the interest rates plus any charges that the lenders have added onto the loan. This example is of APR that does not include any charges: if you are borrowing £1000, and you are supposed to pay £10 in interest each month for a year, the APR will be 12%. However, in addition to this, the APR will factor in any charges, meaning the APR will turn out to be a higher value than the interest rate.

Nominal interest will depend on the loan amount, but the interest added to payday loans will be a percentile value, meaning it doesn’t matter how much you are looking to borrow. With most payday lenders including Wizzcash, interest is charged daily.


Different lenders will generally have different fees, so it is important to look over these before you determine who you should borrow from. However, with the FCA’s caps on the fees, payday loans are fair, and the maximum amount of fees and charges that you may have to pay are capped at 100% so you can never pay more than twice of what you have borrowed. Here at Wizzcash, our only charge is a £15 default fee, which is the amount the FCA has capped as the maximum on default fees. This means that with us, no matter how many times you default during the life of your loan, you will only pay the fee once.

If you’re in need of help when it comes to how your payday loan is structured, then make sure to get in touch with a member of our friendly team, or simply use our online loan calculator.

Generic advice is not a service regulated by the Financial Conduct Authority.