Why rollovers are the most expensive part of a payday loan
A payday loan is priced as a flat fee for a short term — usually 14 days. The trap is not the first fee; it is the repeat fee. When the due date arrives and the full balance plus fee is more than the borrower can spare, the lender offers to "roll over" the loan: pay just the finance charge, and the principal is carried forward for another term.
The principal never shrinks. Each renewal charges the full fee again. The Consumer Financial Protection Bureau has found that the majority of payday-loan fee revenue comes from borrowers caught in exactly this cycle — loans renewed again and again until the fees rival or exceed the original amount borrowed.
How this simulator calculates cost
Total fees = the fee per cycle × (1 original term + the number of rollovers). The fee per cycle is your amount borrowed ÷ 100, multiplied by the fee per $100. The principal is repaid only once, at the end. Effective APR annualizes the per-cycle fee over a 14-day term, so it reflects the price of the credit regardless of how many times it is renewed.
How to break the cycle
Ask your lender for an Extended Payment Plan (EPP) — a no-extra-cost installment schedule most states mandate. Look at a credit-union Payday Alternative Loan, earned-wage access, or a nonprofit hardship grant, all of which can pay off a payday balance far more cheaply. If a loan has already spiraled, our guide on what to do when you can't repay walks through your rights step by step.
Frequently asked questions
What is a payday loan rollover?
A rollover (renewal) is when you cannot repay on the due date, so you pay only the finance charge to extend the loan. The principal stays unpaid and a new fee is added.
How much do rollovers cost?
Every rollover charges the full fee again. At $17.50 per $100, a $300 loan rolled four times costs about $262 in fees — while the $300 principal is still owed.
Can lenders roll over a loan indefinitely?
No. Many states cap or ban rollovers, and others require a database check or cooling-off period. The rules differ by state — see your state payday-loan guide.