Micro Loan Calculator

What this works out

Micro-loans and payday-style advances are quoted per day or per week, hardly ever as an annual rate. “1.5% a day” sounds like nothing. On $500 over a 30-day term it is $225 of interest, and the amount you hand back is $725.

Flat-rate short-term interest

Interest = Principal × Rate per period × Number of periods Total repayment = Principal + Interest

There is no amortization here and no declining balance. The rate applies to the full amount borrowed for the whole term, which is most of why these loans are so expensive.

Turning it into an APR (Annual Percentage Rate)

APR = Rate per period × Periods per year

• A daily rate is multiplied by 365
• A weekly rate by 52
• A monthly rate by 12

So 1.5% a day is 547.5% APR. Lenders are usually not required to advertise it that way on a term under a month, which is exactly why the annual figure surprises people.

Worked example

$500 borrowed for 30 days at 1.5% per day.

• Interest = $500 × 0.015 × 30 = $225.00
• Total repayment = $500 + $225 = $725.00
• APR = 0.015 × 365 × 100 = 547.5%

You pay $225 for the use of $500 for one month.

Where these rates sit

Kiva’s US loans run at 0%, funded by donors instead of interest. Grameen Bank and Accion sit in the MFI band, where the rate covers the real cost of servicing a $300 loan in a village with no branch. The spread across that table is not a pricing detail. It is the difference between borrowing that grows a business and borrowing that consumes it.

Before you sign

Ask for the total dollars repaid, not the rate. A lender quoting “only 1.5%” and a lender quoting “547% APR” can be the same lender describing the same loan. Origination fees of 1 to 3% are common on top and are not part of this calculation, so add them to whatever number you get here.