APR Calculator

1. Enter the loan amount you will borrow.
2. Enter the nominal annual rate the lender quotes.
3. Enter the term in years and the upfront fees.
4. Read the APR, the monthly payment and the total paid.

Here is what each result means:

APR, the annual percentage rate, is the yearly cost of borrowing expressed as a single percentage that includes both interest and most fees. It exists so borrowers can compare loans on a level footing, because a loan with a low headline rate but high fees can cost more than one with a higher rate and no fees.

The nominal rate is just the interest charged on the balance. The APR goes further by recognising that fees reduce the money you actually receive while you still repay the full loan amount. That gap makes your real cost higher, so the APR sits above the nominal rate whenever there are fees, and equals it when there are none.

This calculator estimates APR the way regulators define it: it finds the single monthly rate that makes the present value of all your payments equal to the net amount you receive after fees, then multiplies by twelve to annualise. The result is a fair, fees-included cost you can compare across offers.

APR is not the same as APY. APR describes the cost of borrowing and does not compound within the year, while APY describes the return on savings and does. When you are borrowing, APR is the number that matters for comparison.

It solves for the rate that balances what you receive against what you repay.

1. The monthly payment is computed from the loan amount at the nominal rate.
2. Fees are subtracted from the loan to give the net amount received.
3. The calculator searches for the monthly rate that discounts the payments back to that net amount, then multiplies by twelve.

For the payment itself, see the loan payment calculator. For a home loan, see the mortgage calculator.

Borrow $20,000 at a 6% nominal rate over 5 years with $600 in fees.

Result: the monthly payment is about $386.66, but because you only net $19,400 after fees, the APR works out to roughly 7.3%, above the 6 percent nominal rate. With no fees, the APR would equal 6 percent.

The two rates answer different questions.

Because the APR includes fees, it is the fairer number for comparing loans. Two loans can share a 6 percent nominal rate, but the one with higher fees carries the higher APR and costs you more. Always compare APR with APR, over the same term.

Fees

Higher upfront fees widen the gap between the nominal rate and the APR.

Loan Term

Fees spread over a longer term add less per year, so a longer term can lower the APR effect of a fixed fee.

Loan Size

A fixed fee is a bigger share of a small loan, pushing its APR up more.

Nominal Rate

The APR builds on the nominal rate, so a higher starting rate raises the APR too.

Comparing Loan Offers

Put two loans on the same footing when their rates and fees differ.

Mortgages

See how points and closing costs change the real cost of a home loan.

Personal and Car Loans

Check whether an origination fee makes a low-rate loan more expensive than it looks.

APR turns a messy comparison into a single number.

Loan A has the lower headline rate, but its fees can push its APR above Loan B, which has no fees. Comparing APRs, not nominal rates, reveals which loan is genuinely cheaper over the term.

1. Comparing Nominal Rates

A low rate can hide high fees. Compare APR with APR instead.

2. Ignoring the Term

APR depends on the term. Compare loans over the same length.

3. Forgetting Fees

Leave fees at zero and you just get the nominal rate back, not the true cost.

4. Confusing APR and APY

APR is for borrowing and does not compound within the year; APY is for saving and does.

5. Expecting the Lender Number Exactly

Lenders include or exclude specific fees by rule, so treat this as a close estimate.

This is an estimate for comparison, using standard amortised-loan math.

The interest rate is charged on the balance only. APR adds fees and expresses the total as a yearly percentage, so it is usually higher and better for comparing loans.

Because fees reduce the money you actually receive while you still repay the full loan. That extra cost is spread across the term and shows up as a higher APR.

Usually, when comparing similar loans over the same term. A lower APR means a lower overall cost of borrowing, including fees.

It includes upfront finance fees. Regulators specify exactly which charges count, so a lender's official APR may include or exclude a particular fee differently from this estimate.

It depends on the loan type and the market. Compare any offer with typical rates for that product; a mortgage APR and a credit card APR are on very different scales.

No. APR is the cost of borrowing and does not compound within the year. APY is the return on savings and does compound. Use APR for loans.

A longer term spreads a fixed fee over more years, which can reduce the fee's effect on the APR, but you pay more total interest overall.

By finding the single rate that makes the present value of all payments equal the loan amount minus fees, then annualising. This calculator does that numerically.

No. The calculation runs in your browser and nothing you enter is stored or sent anywhere, unless you choose Save, which keeps the result only on this device.

• Annual percentage rate (Wikipedia).
• Truth in Lending Act (Wikipedia).
• Consumer Financial Protection Bureau: APR (CFPB).