What Trap Detector Calculates
Convert a flat-fee short-term loan into the APR it actually represents.
Trap Detector answers one question: if this short-term loan ran for a year, what rate would you actually be paying?
Short-term lenders quote flat fees because the APR is embarrassing. Trap Detector does the conversion: a $15 fee on a $100 loan for 14 days is not "$15" — it's 391% APR. The same dollar rented at a credit card's baseline 29% for the same two weeks would cost about $1.12. The multiplier is the point.
Quick answer
Trap Detector answers one question: if this short-term loan ran for a year, what rate would you actually be paying?
Key points
- ▸ Formula: APR = (Total Cost ÷ Principal) × (365 ÷ Days) × 100. Credit-card baseline ≈ 29%.
- ▸ Total Cost is every dollar you part with: flat fee + interest + mandatory add-ons. Don't skip the "convenience" surcharge.
- ▸ Days is the actual term, not the advertised one. If the loan rolls over, recompute with the new term at each rollover.
- ▸ Multiplier vs. credit card exposes the trap. A 400% APR is 13.8× the cost of a normal credit card for the same principal and term.
- ▸ Cost-per-day is the gut-punch metric. A $100 loan at $15/14 days is about $1.07/day — useful when someone says "it's only $15".
- ▸ Bands: under 36% fair, 36–100% expensive, 100–400% predatory, 400%+ extortionate. Most storefronts live in the last two.
Examples
- Classic payday loan$100 principal, $15 fee, 14 days. APR = (15/100) × (365/14) × 100 = 391%. About 13.5× a credit card.
- Pawn redemption$200 loan, $40 fee, 30 days. APR = (40/200) × (365/30) × 100 = 243%. About 8.4× a credit card.
- Cash advance on credit card$500 advance, $25 fee + 26% APR. Cash-advance rate runs ~60–80% effective once fees are in. High — but still a quarter of the cost of a storefront.
When to use which tool
- CYAN · STABLE — APR under 30% — near credit-card band, defensible when alternatives are worse.
- GOLD · GUARDED — APR 30-100% — expensive, shop for any other credit before signing.
- MAGENTA · CRITICAL — APR above 100% — predatory trap, 3x+ credit card; find friends-family rate instead.
Related
- Trap DetectorCompute the true APR of a payday loan, pawn redemption, or cash advance — with a predatory heatmap from fair to extortionate.
- When to Run Trap DetectorSix loan formats where the advertised number is not the real number.
- Five Trap Detector MistakesThe errors that let a 400% loan look like a 15% one.
Frequently asked questions
› Is 391% APR really accurate for a 14-day loan? Trust & accuracy
Yes — APR is the annualized rate by definition. It answers "what if this rate ran all year?" Even if you repay in 14 days, the APR is the honest comparison to any other credit product.
› What if I have no other options?
The tool still gives you the true cost so you can ask the lender for better terms, bargain for a friends-and-family rate at any APR lower than the trap number, or accept the cost with eyes open.
› Does it work for buy-now-pay-later?
Yes. BNPL looks free until you miss a payment; then the flat late fee on a small balance acts exactly like a payday APR. Plug in missed-installment fee as Total Cost, time-to-next-payment as Days.
› How should I use a decision framework in real life? How-to
Use a decision framework to expose the tradeoff, not to outsource the decision. Write down the inputs, compare the output with your constraints, then ask what would change the answer. The strongest use is scenario testing: base case, conservative case, and failure case.
› Is this financial, legal, or tax advice? Trust & accuracy
No, this is not legal, financial, tax, medical, or professional advice unless the page explicitly says that use case is supported. It organizes assumptions so you can inspect them. Verify high-stakes choices with qualified people who can review facts, contracts, regulations, and downside risk.