How Daily Repayment Loans Work — and Why the APR Matters
In a daily repayment loan, you borrow a lump sum and pay back a fixed amount every day. These are common in informal markets worldwide — similar to merchant cash advances or certain payday products. Many lenders also deduct upfront fees before handing over cash: a "$1,000 loan" might mean only $900 in your hand, but you still repay based on the full $1,000 — so the true interest burden is higher than it appears.
In the United States, there is no single federal cap on short-term loan rates, but many states use 36% APR as the predatory lending threshold. When the true APR is several times that figure, safer alternatives are worth exploring: federal credit unions (18% APR cap), personal loans from banks, or employer-based salary advances.
Frequently Asked Questions
Total repayment $1,200, total interest $200. The true APR is approximately 445%, far above the 36% threshold used in most predatory lending laws.
If a lender deducts fees upfront, you effectively borrow less than the contract amount but repay the full amount. This increases the true cost. Entering the actual amount you received gives a more accurate APR calculation.