APR vs. Interest Rate: The Simple Difference and Why It Matters
| Interest rate | Cost of the principal only |
|---|---|
| APR | Interest plus required fees, as a yearly rate |
| Which to compare | APR and total to repay |
| Payday loans | Usually priced as a fee per $100 |
| Disclosure | Required before you sign (Truth in Lending Act) |
| Tool | Our APR calculator |
APR vs. interest rate in one minute
Think of the interest rate as the price tag on the money itself. The APR is the price tag plus the required add-ons, stated as a yearly rate. If a loan has no fees, the APR and interest rate are about the same. If it has an origination fee or other finance charges, the APR is higher than the interest rate.
The federal Truth in Lending Act and its rule, Regulation Z, require lenders to show the APR, the finance charge and the total of payments before you commit, so you can compare loans on the same basis.
Worked example: a $1,000 installment loan
Suppose a lender offers $1,000 for 12 months at a 30% interest rate with a 5% origination fee ($50) taken out of the loan. You receive $950 but repay the full $1,000 plus interest.
| Value | |
|---|---|
| Amount borrowed | $1,000 |
| Cash you receive | $950 |
| Interest rate | 30% |
| Monthly payment | about $97.49 |
| Total repaid | about $1,169.85 |
| APR (fee included) | about 40.3% |
The fee raises the APR by about 10 points even though the interest rate didn't change. That's why two loans with the same interest rate can cost different amounts. Try your own numbers with the APR calculator or the personal loan calculator.
Payday loan interest rates: how they're really priced
People search for payday loan interest rates, but most payday loans don't charge interest the way a bank loan does. They charge a flat fee per $100 borrowed, set or capped by state law, due on your next payday. For example, at $15 per $100, a $500 loan costs $75 and you repay $575 two weeks later.
Because the payday loan APR stretches that two-week fee across a full year, the APR on any short loan looks large compared with a loan repaid over years. For short loans, the most useful comparison is the dollar fee and total to repay. Your lender must still disclose the exact APR before you sign. Check your state's caps:
| State | Payday loans | Max loan | Fee / rate cap | Rollovers |
|---|---|---|---|---|
| Alabama | Legal | $500 per loan. | The fee may not exceed 17.5% of the amount advanced ($17.50 per $100). | One renewal or extension is allowed at the same fee, for a maximum of two continuous transactions. |
| Alaska | Legal | $500 outstanding at one time from a licensee, including all of its locations. | A non-refundable origination fee of up to $5, plus a fee of no more than $15 per $100 advanced or 15% of the advance, whichever is less. | Up to two consecutive renewals, each for at least 14 days and at no higher fees. |
| Arizona | Not available | — | Licensed consumer lenders may charge up to 36% a year on consumer loans of $3,000 or less (lower tiers above $3,000), plus limited allowed… | — |
| Arkansas | Not available | — | 17% per year maximum interest on loans covered by Amendment 89 § 3. | — |
| California | Legal | Your personal check cannot exceed $300. | The fee may not exceed 15% of the check amount ($45 on a $300 check). | Rollovers are prohibited. |
| Colorado | Not available | $500. | 36% APR, all charges included. | — |
| Connecticut | Not available | — | 36% APR (or the Military Lending Act maximum, if lower) for small loans under $5,000. | — |
| Delaware | Legal | $1,000. | No cap. | No more than 4 rollovers of an existing loan. |
| District of Columbia | Not available | — | 24% per year maximum interest. | — |
| Florida | Legal | $500 per single-payment loan (not counting fees). | Single-payment loan: fees may not exceed 10% of the amount provided, plus a verification fee (OFR states this as $5.00). | Not allowed. |
| Georgia | Not available | — | — | — |
| Hawaii | Not available | — | — | — |
| Idaho | Legal | $1,000 per loan, and no more than $1,000 in total outstanding with one lender (plus fees). | No dollar or percentage cap. | A lender may renew a payday loan no more than 3 times in a row; after that the loan must be repaid in full. |
| Illinois | Not available | Payments coming due in the loan's first month, together with your other payday loans due that month, may not exceed the lesser of $1,000 or… | 36% APR on the unpaid amount financed, calculated the all-in Military Lending Act way (finance charges plus fees and add-on products count). | Prohibited. |
| Indiana | Legal | $825 total outstanding with one lender (single or combined loans), and no single loan over 20% of your gross monthly income. | 15% on the first $250; 13% on the part from $250 to $400; 10% on the part from $400 to $825. | Not allowed. |
| Iowa | Legal | A lender may not hold checks from you totaling more than $500 at any one time. | $15 on the first $100 of the check and no more than $10 on each additional $100 (pro rata for part of $100). | Not allowed. |
| Kansas | Legal | $500 cash advance. | 15% of the amount of the cash advance. | A payday loan may not be repaid with the proceeds of another payday loan from the same lender or a related business. |
| Kentucky | Legal | You may have at most two payday loans open at once, and the total cash you receive from all open payday loans may not exceed $600. | The fee may not be more than $15 per $100 of the check's face amount, prorated. | A lender (or its affiliate) may not renew, roll over or consolidate a payday loan for a fee. |
| Louisiana | Legal | For September 1, 2026 to August 31, 2027, the most a lender may pay you on a payday loan (deferred presentment) is $740; a 'small loan' is… | The fee may not be more than 16.75% of the face amount of your check. | Renewals and rollovers are banned. |
| Maine | Legal | Maine law sets no payday-specific maximum loan amount, according to the Bureau of Consumer Credit Protection. | A lender may charge either the general consumer-loan finance charge (30% a year on the first $2,000 and lower tiers above that) or a flat… | Maine law has no payday-specific rollover or renewal limit, according to the Bureau. |
| Maryland | Not available | — | Interest on loans of $2,000 or less is capped at 2.75% a month (33% a year) on the first $1,000 and 2% a month (24% a year) on the rest;… | — |
| Massachusetts | Not available | — | Licensed small loan companies may charge no more than 23% a year on the unpaid balance (actuarial method), plus a $20 administrative fee… | — |
| Michigan | Legal | A licensee may make one payday loan to you for any amount up to $600 (fees not included). | The service fee may not exceed 15% of the first $100, 14% of the second $100, 13% of the third $100, 12% of the fourth $100 and 11% of the… | A lender may not renew a payday loan. |
| Minnesota | Legal | A consumer small loan is $350 or less, and one borrower may not owe more than $350 in total on such loans at one time. | The lender may charge an annual percentage rate of up to 50%, counting all interest, finance charges and fees. | A consumer small loan may not be repaid with the proceeds of another such loan from the same lender (or a related… |
| Mississippi | Legal | Your check (loan plus fee) may not be for more than $500, and you may not have more than $500 in total outstanding, fees included. | No more than $20 per $100 advanced for checks with a face amount up to $250, and no more than $21.95 per $100 advanced for checks over $250… | A lender may not renew or extend a payday check, and a check may not be paid off with the proceeds of another check… |
| Missouri | Legal | Payday loans are loans of $500 or less, and a lender (with its affiliates) may not have more than $500 in payday loans outstanding to you… | Interest and fees are whatever the parties agree to (simple interest), but you can never be required to pay total interest and fees of more… | The lender must renew the loan if you ask in writing and pay the interest and fees due, but each renewal must reduce… |
| Montana | Not available | A payday loan must be at least $50 and no more than $300, not counting the fee. | The fee for making or carrying a payday loan may not be more than 36% a year. | Payday loans may not be renewed or extended for a fee, and a lender may not pay off one payday loan with another. |
| Nebraska | Not available | A lender may not hold checks from one borrower totaling more than $500 at any one time. | A lender may not charge more than 36% APR. | Renewals, rollovers and paid extensions are banned. |
| Nevada | Legal | A payday loan, together with the borrower's other outstanding loans from the lender, may not exceed 25% of the borrower's expected gross… | Nevada sets no cap on the interest rate or fee for a payday loan. | Repaying, renewing or refinancing a payday loan may not stretch the loan past 90 days from the date it was made. |
| New Hampshire | Not available | A borrower may not owe a lender more than $500 in payday loan principal at one time. | APR may not exceed 36%, and interest is the only charge allowed, with no other fees. | Refinancing, renewing or extending a payday loan is prohibited. |
| New Jersey | Not available | — | — | — |
| New Mexico | Not available | — | 36% APR maximum, counting ancillary products, credit insurance and other fees even if federal Regulation Z would leave them out. | — |
| New York | Not available | — | Civil usury cap of 16% a year (loans under $250,000 by non-bank lenders and state-chartered banks); above 25% a year is criminal usury. | — |
| North Carolina | Not available | — | Unlicensed lenders: 16% a year on loans of $25,000 or less. | — |
| North Dakota | Legal | A lender may not give you more than $500 in one payday loan. | The fee may not be more than 20% of the amount the lender pays you. | A loan may be renewed only once. |
| Ohio | Legal | A short-term loan may not exceed $1,000. | Interest is capped at 28% a year. | A lender may refinance a short-term loan only if the new loan stays within the 28% interest cap and no monthly… |
| Oklahoma | Not available | Small loans are capped by the total you may owe across all small lenders. | Interest may not exceed 17% per month. | — |
| Oregon | Legal | — | Interest may not exceed 36% a year. | No more than two renewals. |
| Pennsylvania | Not available | — | No payday fee schedule exists. | — |
| Rhode Island | Legal | The check may not exceed $500, and a lender and its affiliates may hold no more than $500 in total outstanding checks from you. | The deferred deposit fee may not exceed 10% of the amount advanced. | Only one rollover (extending the due date for an extra fee) is allowed. |
| South Carolina | Legal | No more than $550 advanced to you at one time, not counting the fee. | The fee may not exceed 15% of the principal and may be charged only once per agreement. | Not allowed. |
| South Dakota | Not available | — | 36% a year, counting all fees and charges. | — |
| Tennessee | Legal | A lender (and related persons) may hold no more than two of your checks at once, with a total face value of no more than $500. | The fee may not exceed 15% of the face amount of the check. | Not allowed. |
| Texas | Legal via CSO/CAB | — | No state cap on the credit access business fee. | State law does not ban refinancing. |
| Utah | Legal | — | No rate or fee cap in the payday statute. | Rollovers are allowed only if you ask for one, and only within the 10-week limit. |
| Vermont | Not available | — | No payday product is allowed. | — |
| Virginia | Legal | A short-term loan may not exceed $2,500, and a lender may not have you owe it more than $2,500 in principal at any time. | Interest at a simple annual rate of no more than 36%, plus a monthly maintenance fee of no more than 8% of the original loan amount or $25,… | A lender may refinance a short-term loan only into another short-term loan that meets all the Chapter 18 rules, and… |
| Washington | Legal | $700 or 30% of your gross monthly income, whichever is lower. | Total interest and fees may not exceed 15% of the first $500 of principal and 10% of any principal above $500. | A lender may not give you a new payday loan to pay off an old one from the same lender or its affiliate. |
| West Virginia | Not available | — | No payday product is allowed. | — |
| Wisconsin | Legal | A lender may not make a payday loan that leaves you owing all payday lenders combined more than $1,500 or 35% of your gross monthly income,… | No limit on the interest a licensee may charge before the maturity date. | You may repay a payday loan with the proceeds of one new payday loan, but you may not repay that second loan with yet… |
| Wyoming | Legal | — | The only charge allowed is a post-dated check finance charge of no more than $30 or 20% a month of the principal, whichever is greater. | A post-dated check loan may not be repaid, refinanced or consolidated with the proceeds of another post-dated check… |
Verified against state statutes and regulators; click a state for citations. Last verified 2026-10-25.
Full details: payday loan laws by state and what a $500 payday loan costs.
Title loan interest rates
Title loan interest rates are set by state law where title lending is allowed. Some states price them as a monthly fee, others as an APR cap, and some cap the loan amount relative to your vehicle's value. Single-payment title loans are often due in about 30 days, while some states allow installment title loans repaid over several months.
Use the calculator below to see the dollar cost on your amount, and see title loan laws by state or how much you can get on a title loan.
Title loan calculator
Many title lenders lend 25%–50% of a vehicle's value, and you keep driving your car. Estimate only; your lender shows exact terms.
Same interest rate, different term
Term length changes the total cost even when the rate stays the same. At 30% APR, $2,000 repaid over 18 months is about $139.34 a month, about $2,508.12 in total. Stretch it to 24 months and the payment drops to about $111.83, but the total rises to about $2,683.82. A lower payment can make a loan easier to fit in your budget; a shorter term usually costs less overall. Pick the payment you can make comfortably every month, then compare totals.
How to compare loan offers
- Look at the total to repay. It's the clearest dollar answer to “what does this cost?”
- Compare APRs for loans of similar length. APR is designed for apples-to-apples comparisons.
- Check the payment against your budget. A longer term lowers the payment but usually raises the total.
- Ask about fees: origination, late fees, and whether you can prepay without a penalty.
- Watch for “add-on” products like optional insurance, which can raise the cost.
See if you qualify — it takes about 3 minutes. Start your free request. There is no obligation to accept an offer.
APR, interest and fees: quick glossary
- Principal: the amount you borrow.
- Interest rate: the yearly percentage charged on the principal.
- Finance charge: the total dollar cost of credit, including interest and required fees.
- Origination fee: an upfront fee, often deducted from the loan proceeds.
- APR: the finance charge expressed as a yearly rate.
- Total of payments: everything you'll pay back if you pay as scheduled.
More terms in our glossary.
Get real numbers for your situation
The quickest way to know your actual rate is to see an offer. Our free form takes about 3 minutes and reaches lenders in our network that serve your state, for amounts from $100 to $5,000. If a lender approves you, it shows the APR, fees, payment schedule and total to repay before you sign, and you're never obligated to accept. Zebra Finance is a matching service, not a lender. See rates and fees.
See if you qualify — it takes about 3 minutes. Start your free request. There is no obligation to accept an offer.
Frequently asked questions
Is APR the same as interest rate?
Not always. The interest rate covers only the cost of the principal. APR adds required fees, like an origination fee, and states the total as a yearly rate. With no fees, the two are nearly equal; with fees, the APR is higher.
Which is better to compare, APR or interest rate?
APR, because it includes required fees and lenders must calculate it the same way under federal law. For very short loans, also compare the dollar fee and total to repay, which are easier to picture.
How do payday loan interest rates work?
Most payday loans charge a flat fee per $100 borrowed instead of ongoing interest, with limits set by state law. For example, at $15 per $100, a $300 loan costs $45 and you repay $345 on your next payday. The lender discloses the exact APR before you sign.
Why is APR higher than my interest rate?
Your loan likely includes fees, such as an origination fee deducted from the amount you receive. APR spreads those fees over the loan's term, which raises the yearly rate above the stated interest rate.
What is a good APR on a personal loan?
It depends on your credit, income and state. Borrowers with strong credit generally see lower APRs than those with fair or bad credit. Compare offers using the APR and total to repay, and check state limits on our personal loan rates by state page.
Sources
- CFPB — Difference between a loan's interest rate and its APR
- eCFR — Regulation Z (12 CFR Part 1026), Truth in Lending