The Annual Percentage Rate (APR) is the yearly cost of borrowing, expressed as a percentage of your principal. Interest is calculated based on a Daily Periodic Rate (APR ÷ 365) applied to your principal each day.

Fixed-term loan

The APR for a fixed-term loan depends on two factors:

1. Interest payment plan type: Payment at Maturity loans carry a higher APR than Monthly Payment loans, because interest payments are deferred.
2. Loan size: Larger loans qualify for lower rates.

Minimum loan amounts vary by state. Loans opened at a tier threshold qualify for the lower APR. Once opened, the APR of the loan remains fixed for the entire 12-month term.

How is interest calculated for fixed-term loans?

The daily rate, calculated by dividing your annual interest rate by 365 (or 366 in a leap year), is applied to your outstanding principal. With a monthly payment loan, the principal remains constant unless you make early repayments. With a payment-at-maturity loan, interest for the entire term is pre-calculated and added to your balance.

Actual rates depend on loan type, amount, and market conditions at the time of opening. For illustrative purposes, assuming no liquidations or early repayments:

• Monthly Interest Payments: A $10,000 loan at 12% Annual Percentage Rate (APR) over 12 months would cost roughly $100/mo in interest, with the $10,000 principal due at maturity.
• Full Payment at Maturity: A $10,000 loan at 13% APR over 12 months would result in approximately $1,300 in total interest, with principal and interest due together at the end of the term.

Line of credit

The line of credit carries a variable APR, currently 13%. The rate is calculated as the U.S. Prime Rate plus a fixed margin, and it is recalculated on the last business day of each calendar quarter (March 31, June 30, September 30, December 31). It may increase or decrease at most once per quarter based on changes to the Prime Rate.

The line of credit APR is flat regardless of credit line size. Interest accrues only on the amount you draw (your principal), not on your total credit line or available credit.

How is interest calculated for the line of credit?

Interest starts accruing the moment you draw funds and continues until you repay. Each new draw increases your daily balance, and each repayment decreases it. Your monthly interest bill is the sum of the daily interest charges across the entire billing cycle.

Suppose you have a line of credit at 13% APR (daily rate ≈ 0.035616%):

1. On the 1st, you draw $50 to cover a small expense. Interest begins accruing on $50 immediately.
2. On the 16th, you draw another $300. Your daily balance rises to $350, and interest now accrues on the full $350.
3. On the 25th, you repay $200 before 5 PM ET. Your daily balance drops to $150 that same day.

At the end of the 30-day billing cycle, your interest is calculated on the daily balance each day:

• Days 1–15 (15 days at $50): ~$0.27
• Days 16–24 (9 days at $350): ~$1.12
• Days 25–30 (6 days at $150): ~$0.32
• Total interest due: ~$1.71

That ~$1.71 is your minimum monthly payment for the cycle. Your $150 principal remains outstanding until you choose to repay it. For more on how payments work, see How do interest and principal payments work?.