Fixed or Variable? How Payday and Installment Loan Rates Are Structured

Small-dollar lending is almost entirely fixed-rate — but “fixed” means three different things depending on the product, and the difference changes what a rate hike elsewhere does to your loan. Here is the structure layer that pricing pages skip.

Payday: a flat fee, not an interest rate

A payday charge is a flat fee per period — $15–$30 per $100 per two weeks, capped by state statute. It does not float, index or adjust, because it is not interest: it is a fee that converts to an APR only when you annualize it (which is why the same $30 reads as 391% on a two-week $300 loan). The practical consequence cuts both ways: market rate moves cannot raise your loan’s cost mid-term — but time does. The fee re-charges per cycle, so a fixed payday fee on a rolled loan compounds in the only direction it can: up. The per-amount math is on the cost hub.

Installment: fixed APR, amortized

Licensed installment loans are fixed-APR, amortized products: the rate is locked at signing, and each payment splits into interest (declining) and principal (rising). Two protections come bundled here. First, rate moves elsewhere cannot touch your payment. Second, prepayment works in your favor — federal rules require lenders to refund unearned interest when you pay off early, so every early dollar saves its share of the fixed APR. Verify both on the contract: a fixed APR with a prepayment penalty is the one combination to refuse.

The exception: variable-rate credit lines

The genuine variable products in this market are lines of credit — Mobiloans (the tribal line product we track, disclosed at 73.89%–413.20%) and the bank-partner fintech lines (Elastic-class). Variable here means the rate can move with an index within a disclosed range, and minimum payments can stretch the repayment for months. The honest framing: a line’s flexibility (draw, repay, redraw) is the product; the variable pricing is its cost of being flexible. If you need a fixed total for budgeting, a closed-end installment loan does that and a line does not.

Precomputed interest: the trap inside “fixed”

Some subprime installment contracts use precomputed interest — the total interest for the full term is calculated at signing and added to the balance, even though federal rebate rules apply on early payoff. A precomputed loan shows the same fixed payment as a simple-interest one, but behind the scenes early payoff rebates less than you would expect (legacy “rule of 78s” math weighted interest to the front). The one-line question that disarms it: “Is this simple interest, and what exactly refunds if I pay off six months early?” Get the answer in writing.

What “fixed” actually protects you from

Product	Rate type	Can it rise mid-loan?	What moves instead
Payday (licensed state)	Flat statutory fee	No	Re-charges per cycle if rolled
Installment (licensed)	Fixed APR	No	Nothing — amortization only
Tribal installment	Fixed per agreement	No (set in contract)	Nothing — but no state cap bounds the initial rate
Credit lines	Variable range	Yes, within disclosed band	Minimum payments stretch

One more layer worth knowing: your own behavior moves these totals more than any rate does. Rolling a payday loan twice adds more cost than most APR differences between lenders; prepaying an installment loan six months early saves more than shopping 149% down to 139%. The structure is fixed — your paydown speed is not. The total-of-payments comparison that decides between products is in our installment vs payday guide, and the state ceilings binding the first two rows are on the laws hub.

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