The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.

Average Cost of Payday Loans

Payday loans are just about the most expensive way to borrow money. Find out how much a payday loan will typically cost you to help you decide if it's worth it.

Cost of a Payday Loan

The cost of a payday loan will typically depend on the amount you borrow, the interest rate and the amount of time you borrow the money. Below, we've calculated the amount it might cost you to borrow £100, £250 and £500 for the maximum interest rate that can be charged (0.8% per day) and various amounts of time (30 days, 60 days and 90 days). Note: most payday loans charge the maximum interest rate of 0.8% per day. Also, these amounts assume you never miss a payment and don't incur any late payment fees.


Amount you'll repay on payday loans charging 0.8% interest/day
30 days60 days90 days
£100 loan£124£148£172
£250 loan£310£370£430
£500 loan£620£740£860
chart showing the cost of a £100 payday loan

In 2015 a price cap was introduced that limits the amount repaid by the borrower (including all charges) to twice the amount borrowed.

How Much do Borrowers Typically Pay for a Payday Loan?

The Financial Conduct Authority (FCA) has found that borrowers typically repay 1.65 times the amount they borrow. The average amount of money borrowed in 2018 was £250; the average amount payable was £413 (1.65 times the average amount borrowed).

Amount BorrowedTypical Amount Repaid
£100£165
£200£330
£300£495
£400£660
£500£825
chart showing the cost of a £500 payday loan

Average Payday Loan APR

According to the FCA, the average APR charged for payday loans has been around 1,250%—which is essentially the maximum interest rate of 0.8% per day. There are variations in the APR depending on specifics of any loan. For example, loans which are repaid in instalments over a period of time typically have lower APRs than single instalment payday loans (where you don't pay anything until the end).

Payday Loan Price Capping

Following the introduction of rules to cap HCSTC loan charges, all firms must ensure that:

  • Interest and fees charged must not exceed 0.8% per day of the amount borrowed
  • If borrowers default, fees must not exceed £15
  • Borrowers must never pay more in fees and interest than 100% of what they borrowed

Other Costs of Payday Loans

If you miss a payment on a payday loan, you can be charged up to £15. These fees can significantly add to the overall cost of a payday loan, especially if you miss more than one payment.

One long-term, unexpected cost of payday loans is the effect one can have on your credit report. When you apply for credit, lenders look at your credit report to gain an understanding of how risky it would be to lend money to you. They use your credit history to help them decide if they should lend money to you, and at what price.

Each time you apply for credit, a mark is made on this credit report. Unfortunately, payday loan applications are noted under a separate section so lenders can see how often you've applied for a payday loan, and for how much. The more you've borrowed via payday loans, the riskier your profile will be to potential lenders. If they decide to lend to you, they may charge a higher interest rate to reflect the perceived risk. As a result, using payday loans can cost you in the long term by making future borrowing more expensive. For example, using payday loans could impact your ability to get a mortgage in the future.

Comments and Questions

The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.