APR Calculator: Find a Loan's True Annual Percentage Rate
Apr calculator. Enter the loan amount, the stated interest rate, the term in months or years, and any upfront fees (origination, points, closing costs), and choose whether fees are financed into the loan or paid up front. The calculator finds the monthly payment, then solves for the APR as the rate that makes the payments equal the cash you actually receive, using the actuarial method. It shows the APR next to the stated rate, total interest, total fees, and total cost. Runs fully in the browser.
How to use
- Enter the loan amount and the stated annual interest rate. 0% is allowed.
- Enter the term and choose months or years.
- Enter upfront fees, or 0. Choose whether those fees are financed into the loan or paid at closing.
- Read the monthly payment, the APR to three decimals, the gap versus the stated rate, total interest, total fees, and total cost.
Formula
The monthly payment is M = P × r(1+r)^n / ((1+r)^n − 1), where P is the note amount, r is the stated monthly rate, and n is the number of months. At 0%, the payment is P / n. If fees are paid at closing, P is the loan amount and the cash you receive is the loan amount minus the fees. If fees are financed, P is the loan amount plus the fees and the cash you receive is the loan amount. APR is 12 × i × 100, where i is the monthly rate that makes the present value of the payments equal the cash you receive. With no fees, APR equals the stated rate.
Example. A $10,000 loan at 6% for 36 months with a $300 fee paid at closing has a payment of $304.22 and an APR of 8.057%.
Example. A $200,000 loan at 6.5% for 360 months with $4,000 in fees paid at closing has an APR of 6.695%. The same loans with no fees have an APR equal to the stated rate.
What this APR includes
The rate spreads the upfront fees you enter over the full term. It does not add appraisal fees, title insurance, taxes, or late fees unless you include those dollars in the fee field.
Frequently asked questions
What is APR?
APR, or annual percentage rate, is the yearly cost of a loan including interest and most upfront fees. It lets you compare loans with different rates and fees on equal terms.
Why is APR higher than the interest rate?
Fees reduce the money you actually get while your payments stay the same, so the effective rate you pay is higher. With no fees, APR equals the interest rate.
What fees are included in APR?
APR usually includes origination fees, discount points, and some closing costs. It usually excludes things like appraisal fees, title insurance, and late fees.
What is the difference between APR and APY?
APR is a simple yearly rate used for loans and does not include compounding. APY includes compounding and is mostly used for savings accounts.
Is a lower APR always the better loan?
Usually, but not always. If you plan to pay off or refinance early, a loan with lower fees can cost less even with a slightly higher APR, because APR spreads fees over the full term.
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