APR Calculator

Enter the loan amount, interest rate, term and any upfront fees to find the true APR — the rate that reflects what borrowing really costs once fees are baked in — along with the monthly payment and total cost.

Enter the loan details, then press Calculate APR.

APR vs the interest rate

The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) is broader: it folds in upfront fees and points, so it reflects the true yearly cost of the loan. Because fees mean you receive less than you repay against, the APR is always at least the interest rate, and usually higher.

payment = solved from rate · APR = rate where net received = present value of payments

First the monthly payment is found from the loan amount and nominal rate using the standard amortization formula. Then the APR is the annualized rate that makes the present value of those payments equal to the amount you actually received (loan minus fees).

Worked example

$20,000 at 6% over 60 months, with $600 in fees:

Monthly payment: ≈ $386.66 (from 6% on $20,000 over 60 months).
Net received: $20,000 − $600 = $19,400.
True APR: the rate equating $19,400 to those payments ≈ 7.2%, above the 6% nominal.

How the APR is solved

There's no neat closed-form for APR with fees, so the calculator solves it numerically (a bisection search) for the monthly rate that balances the equation, then multiplies by 12 to annualize. This mirrors how lenders must disclose APR under truth-in-lending rules so borrowers can compare offers on a like-for-like basis. Two loans with the same headline rate can have very different APRs if one charges heavier fees — which is exactly why APR exists.

Tip: want a full payment schedule? Use the amortization schedule calculator or the loan calculator.

Frequently asked questions

What's the difference between APR and interest rate?

The interest rate is the cost of the principal alone. APR adds upfront fees and points, expressing the total yearly cost as a single percentage. APR is therefore equal to or higher than the interest rate and is better for comparing loans.

Why is my APR higher than the interest rate?

Because fees mean you receive less cash than the principal you repay interest on. Spreading those fees over the loan as an effective rate pushes the APR above the nominal rate — the bigger the fees, the bigger the gap.

Does APR include all costs?

It includes finance charges like origination fees and points, but not every third-party cost (some insurance, late fees or optional add-ons). Always read the lender's disclosure to see exactly what's bundled into their stated APR.

Is a lower APR always better?

Usually, for comparing similar loans, yes — it captures rate and fees together. But also weigh the term and monthly payment: a longer loan can have a lower APR yet cost more in total interest because you pay for longer.

MB
Mustafa Bilgic · Editor, Calcool
Solves the APR numerically so net proceeds equal the present value of payments, in the spirit of truth-in-lending disclosure. Everything runs in your browser — nothing you enter is uploaded, logged or stored.

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