Cash Advance Loan of $500: $576 Repayment Calculation

A short-term loan from a bank or alternative lender is known as a cash advance. Additionally, credit card issuers offer a service that enables cardholders to withdraw a certain amount of cash. Although cash advances come with high interest rates and fees, they appeal to borrowers due to their swift approval and funding.

A cash advance may be a viable choice for individuals facing a financial emergency with limited means to obtain funds. This is particularly true if the person has a well-defined and realistic plan to repay the borrowed amount within a short timeframe.

It’s worth noting that cash advance loans are intended to provide quick access to funds but are short-term and have high-interest rates and fees.

How to Calculate Cash Advance Loan of $500

Assuming a repayment period of 14 days (2 weeks) which is common for cash advance loans, we can calculate the total borrowing cost for a $500 loan with an annual percentage rate (APR) of 400%.

  • Loan Amount: $500
  • Annual Percentage Rate: 400% APR
  • Repayment Period: 14 days (2 weeks)

(Step-1) Calculate the daily interest rate for the cash advance loan:

Daily Interest Rate (Cash Advance Loan) = (APR / 365)

Daily Interest Rate (Cash Advance Loan) = (400% / 365) = 1.0959% (approx.)

(Step-2) Now, let’s calculate the total borrowing cost for the $500 cash advance loan:

Interest Charges (Cash Advance Loan – $500) = Loan Amount * Daily Interest Rate * Repayment Period Interest Charges (Cash Advance Loan – $500) = $500 * 1.0959% * 14 = $76.94 (approx.)

Total Repayment Amount (Cash Advance Loan – $500) = Loan Amount + Interest Charges Total Repayment Amount (Cash Advance Loan of $500) = $500 + $76.94 = $576.94 (approx.)

Total borrowing cost for $500 cash advance loan with a 400% APR for a 14-day repayment period, would be approximately $576.94.


Nikesh-Mehta-AllOnMoney

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].


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