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What a $500 Loan Actually Costs
Last updated: September 27, 2026 · TreatOrCash is not a lender and does not give financial advice.
The number on the sign is the fee. The number that matters is what you pay in total and how long you are paying it. Those can differ by ten times for the same $500.
Fee versus APR
A payday lender quotes a fee: "$15 per $100." On $500 that is $75, due with the principal in two weeks. It sounds small. Spread over a year, that same pricing works out to roughly 391% APR, because you are paying $75 for the use of $500 for fourteen days.
APR exists so you can compare things of different lengths. It is not a trick and it is not theoretical — it is the only way to see that a two-week fee and a twelve-month interest rate are not comparable on their face. The CFPB has a plain-language explanation.
The same $500, four ways
| Source | Term | Roughly what you repay | Approx. APR |
|---|---|---|---|
| Credit union PAL | 6 months | $530–$545 | ~28% plus a small application fee |
| Credit card cash advance | If repaid in 3 months | $545–$565 | ~25–30% plus a 3–5% advance fee |
| Online installment loan | 6–12 months | $575–$700 | ~36–100% depending on lender and state |
| Payday loan, repaid on time | 2 weeks | $575 | ~391% |
| Payday loan rolled over 4 times | 10 weeks | $875 | ~391%, but you still owe the $500 |
These are representative figures for illustration, not offers. Your actual cost depends on the lender, your state and your financial profile.
The rollover is what does the damage
Look at the last row again. After ten weeks and $375 in fees, the original $500 is still outstanding. That is the mechanism that turns a short-term loan into a long-term problem, and the CFPB's research on payday lending found it is the normal outcome rather than the exception: most payday loans are renewed or followed quickly by another.
The question to ask yourself before signing is not "can I afford the fee" but "where will the full $575 come from in fourteen days". If the honest answer is "the next loan", the loan is not solving the problem.
Reading an offer properly
- Total of payments, not the monthly figure. A lower payment over a longer term usually costs more overall.
- The APR, which a lender must disclose before you sign under the Truth in Lending Act.
- Origination or arrangement fees, and whether they come out of the money you receive. A $500 loan with a $50 fee deducted means $450 in your pocket and $500-plus owed.
- Prepayment. Can you pay it off early and save interest?
- What happens if you are late. Late fees, NSF fees from your bank, and whether they will re-present the debit.
Before you sign
Take the cheapest route you can qualify for, borrow the smallest amount that solves the actual problem, and check whether part of the bill can be covered by assistance first — see rent and utility help. Our list of payday loan alternatives starts with the options that cost least. The FTC's guide to payday and car title loans is worth five minutes before you commit.
Common questions
How much does a $500 payday loan cost?
Typically $15 to $20 per $100 borrowed, so about $75 to $100 in fees for two weeks. That is roughly 391% to 521% APR.
Why is the APR so high on a small loan?
APR annualises the cost. A modest fee charged over fourteen days becomes a very large number when expressed as a yearly rate, which is exactly why the comparison is useful.
Is a longer term cheaper?
The monthly payment is lower, but you usually pay more in total. Compare the total of payments, not the monthly figure.
What is a rollover?
Paying another fee to extend the due date without reducing the principal. It is the main reason short-term loans become long-term debt.
Can I pay a loan off early?
Often yes, and it saves interest on an installment loan. Check for prepayment penalties before you sign.
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