Cash Advance Cost Calculator
Calculation Results:
Total Advance Fee: $0.00
Total Repayment Amount: $0.00
Estimated Effective APR: 0.00%
Understanding Cash Advances
A cash advance is a short-term, high-cost financial solution designed to provide immediate funds, often to cover unexpected expenses until your next payday. Unlike traditional loans, cash advances typically involve a flat fee or a percentage of the borrowed amount, rather than a standard interest rate over a long period. They are characterized by their quick access to funds and very short repayment terms, usually ranging from a few days to a few weeks.
How Cash Advances Work
When you take out a cash advance, you receive a lump sum of money. In return, you agree to repay the original amount (the principal) plus a fee by a specified date, often your next payday. The fee structure can vary significantly. Some providers charge a fixed fee per $100 borrowed, while others charge a percentage of the total advance amount. It's crucial to understand this fee structure as it directly impacts the total cost of the advance.
Types of Cash Advances
- Payday Loans: These are the most common form, designed to be repaid in full on the borrower's next payday. They often come with high fees that, when annualized, translate to very high effective APRs.
- Credit Card Cash Advances: You can withdraw cash from your credit card at an ATM or bank. These usually incur an immediate cash advance fee (e.g., 3-5% of the amount) and often start accruing interest immediately at a higher rate than purchase APRs.
- Merchant Cash Advances (MCA): For businesses, an MCA involves receiving a lump sum in exchange for a percentage of future credit and debit card sales. This is a different structure, more akin to selling future receivables.
Calculating the Cost of a Cash Advance
Our Cash Advance Cost Calculator helps you estimate the total financial burden of a typical short-term cash advance. Here's what each input means:
- Cash Advance Amount: This is the principal amount of money you wish to borrow.
- Advance Fee (as % of amount): This is the percentage fee charged by the provider on the advance amount. For example, a 15% fee on a $500 advance means a $75 fee.
- Repayment Period (Days): This is the number of days until you are expected to repay the full advance amount plus the fee. This period is critical for understanding the true cost.
Understanding the Results
- Total Advance Fee: This is the absolute dollar amount you will pay in fees for the advance.
- Total Repayment Amount: This is the sum of the original advance amount and the total advance fee. This is the full amount you will need to repay.
- Estimated Effective APR: While cash advances don't typically use traditional APRs, this metric helps you compare the cost to other forms of credit. It annualizes the fee over the repayment period, showing you what the cost would be if it were an annual loan. Due to the short repayment periods and high fees, the effective APR for cash advances is often extremely high.
Example Scenario:
Let's say you need a $400 cash advance with a 12% advance fee, and you plan to repay it in 10 days.
- Cash Advance Amount: $400
- Advance Fee (as % of amount): 12%
- Repayment Period (Days): 10 days
Using the calculator:
- Total Advance Fee: $400 * (12 / 100) = $48.00
- Total Repayment Amount: $400 + $48.00 = $448.00
- Estimated Effective APR: ($48 / $400) / (10 / 365) * 100 = 0.12 / 0.027397 * 100 = 438.00%
As you can see, even for a small amount and a short period, the effective APR can be very high, highlighting the importance of understanding the full cost before taking out a cash advance.