Understanding the mathematical mechanics of the Truth in Lending Act (TILA) formula is essential for comparing short-term credit options against traditional consumer debt instruments.
1. The Federal TILA APR Mathematical Formula
The standard federal Truth in Lending Act formula for single-advance, single-repayment short-term consumer credit is:
📐 Federal TILA APR Formula
APR = ((Finance Charge / Principal Borrowed) × (365 Days / Loan Term in Days)) × 100
2. Standard 14-Day Loan Fee vs. Annualized APR Matrix
| Borrowed Amount | Fee ($15 per $100) | Total Repayment (14 Days) | Nominal 14-Day Interest | Annualized TILA APR |
|---|---|---|---|---|
| $100.00 | $15.00 | $115.00 | 15.00% | 391.07% APR |
| $300.00 | $45.00 | $345.00 | 15.00% | 391.07% APR |
| $500.00 | $75.00 | $575.00 | 15.00% | 391.07% APR |
| $1,000.00 | $150.00 | $1,150.00 | 15.00% | 391.07% APR |
| $2,500.00 (Installment, 90 Days) | $375.00 | $2,875.00 | 15.00% | 60.83% APR |