Not every loan is created equal. Credit cards are expensive: the average APR on accounts that carry a balance was 22.15% in the second quarter of 2026. But there is a tier of borrowing where the price is not 22% a year but several hundred percent, and the products are built so that number never quite appears on the page. This is what alternative lending actually costs, and what to reach for instead.

Payday loans: the $15 that is really 391%

A typical payday loan charges a fee of $15 for every $100 borrowed, with the whole amount due on your next payday, usually two weeks out. State laws typically cap that fee somewhere between $10 and $30 per $100. Fifteen dollars sounds like 15% interest. It is not, because the loan lasts two weeks, not a year. There are 26 two-week periods in a year, and 26 times 15% is 390%, which is why both the CFPB and the FTC describe a $15-per-$100 two-week loan as an APR of almost 400% (the FTC’s precise figure, on a 365-day year, is 391%). Roll the same $100 over every two weeks for a year and you pay $390 in fees on a loan that never shrinks.

Auto title loans: your car is the collateral

Title loans run 15 to 30 days and charge monthly finance fees of up to 25%, which the FTC puts at roughly a 300% APR. The difference from a payday loan is what you lose when it goes wrong. The lender holds the title and can repossess the car even after partial payments. When the CFPB studied single-payment title loans in 2016, the typical loan was about $700 at about 300% APR, more than four in five loans were renewed on the day they came due, and one borrower in five had the vehicle seized. The study is a decade old; the loan it describes is the one the FTC still warns about.

Buy now, pay later: interest-free until it is not

Split-pay checkout loans look free, and many of them are, as long as every installment lands on time. The CFPB’s plain-language guidance is direct: while many BNPL loans do not charge interest, most charge late fees when you miss a payment; autopay pulled from a debit card or bank account can trigger overdraft or insufficient-funds fees; and missed or late payments can hurt your credit if the lender reports them. The CFPB withdrew its 2024 interpretive rule on BNPL in May 2025, so read each lender’s own terms rather than assuming a standard set of protections. Treat every plan as a real debt with a real due date, and count how many you have open before adding another.

Earned-wage and paycheck-advance apps

Apps that advance part of a paycheck you have already earned sit in a gap in the rulebook. In December 2025 the CFPB issued an advisory opinion that a covered earned-wage advance, one that does not exceed wages already accrued according to payroll data, is not credit under the Truth in Lending Act, and that expedited-delivery fees and tips are not, in the normal course, finance charges. The practical result is no APR disclosure. The cost is whatever instant-transfer fee and suggested tip you pay, and the way to judge it is the payday math above: a fee per $100 advanced, on money you repay in days, annualizes the same way a payday fee does. Free standard delivery with no tip is a cash-flow tool; paid instant delivery plus a tip on every advance can price like a short-term loan.

Who is protected, and where

Servicemembers have a hard ceiling. Under the Military Lending Act, active-duty members, reservists on active duty, National Guard members on federal orders of more than 30 consecutive days, and their spouses and covered dependents cannot be charged more than a 36% Military APR. Everyone else depends on state law. In a December 2025 National Consumer Law Center survey, 19 states plus the District of Columbia capped the APR on a $500 six-month loan at 36% or below, 31 states plus DC did so for a $2,000 two-year loan, and Delaware and Missouri imposed no cap at all. The Center for Responsible Lending’s 2023 map counted 20 states plus DC holding payday rates near 36% and 28 states permitting triple-digit APRs from 140% to 662%. Your ZIP code decides which market you are in.

The cheaper alternatives

  • Payday alternative loans from a federal credit union. The original PAL program lends $200–$1,000 for one to six months at a maximum 28% APR, with an application fee of no more than $20 and at least a month of membership first. The newer PALs II version goes up to $2,000 for one to twelve months with no waiting period after joining. No rollovers, and only one PAL at a time. At 28%, a two-week $100 loan costs about $1 in interest plus the application fee, versus $15 at a payday storefront.
  • A regular credit union loan. Federal credit unions are capped at 18% APR on most loans, a ceiling the NCUA extended through September 10, 2027.
  • A personal loan. Three-year loans averaged about 13.4% APR in 2026; watch for origination fees of 1%–8%. Current pricing is in Personal Loan Rates in 2026.
  • A hardship arrangement with the creditor you are trying to pay. Utilities, landlords, hospitals and card issuers often offer payment plans that cost less than any loan on this page; ask before you borrow. The debt-relief section of our credit and debt guide covers what is legitimate and what is not.
  • A card, paid down. Even 22.15% is a fraction of 391%, and a card balance can be paid off over several months instead of all at once on payday.

Why people borrow at 400% anyway

The honest answer is access. Someone with a damaged credit file and rent due Friday is not choosing between a payday loan and a 13% personal loan; they are choosing between a payday loan and the late fee. The way out is not willpower, it is a buffer: a few hundred dollars set aside turns most payday emergencies into inconveniences. How much to hold and where to keep it is in How Much Do You Really Need in an Emergency Fund.

The convenience is real. So is the price, and the price is the part the storefront does not put on the sign.