APR Calculator

APR Calculator

Enter the loan amount, interest rate, term and upfront fees to see the APR, the monthly payment and the total cost of borrowing.

How the APR calculator works

The interest rate is the price of borrowing the money. The annual percentage rate, or APR, adds certain upfront fees, such as an origination fee, so it shows the cost of the loan as a yearly rate. That is why the APR on a loan with fees is higher than its interest rate. The CFPB explains the idea on its page What is the difference between a loan interest rate and the APR?

This calculator works out the fixed monthly payment from the interest rate, then finds the yearly rate at which that payment series equals the amount you actually receive after fees. The result is an estimate. A lender’s disclosed APR follows regulatory rules and may differ slightly, so always compare the figure on your loan documents.

The formulas

Monthly payment = loan x i / (1 – (1 + i)^-months), where i = annual rate / 12
Amount received = loan – upfront fees
APR = the yearly rate (monthly rate x 12) at which the payments above are worth the amount received

Example: A $10,000 loan at 9% for 36 months with a $300 fee has a monthly payment of about $318.00. You pay $1,447.90 in interest and $1,747.90 in interest and fees together. Because you receive only $9,700, the APR is about 11.09%, higher than the 9% interest rate.

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    Frequently asked questions

    What is the difference between interest rate and APR?

    The interest rate is the cost of borrowing the principal. The APR also includes certain fees, so it shows the broader yearly cost of the loan and is the better number for comparing offers.

    Does APR include all fees?

    It includes certain finance charges such as origination fees. It does not usually include costs like late fees or optional products. Ask the lender what is included.

    Why is my lender’s APR different from this result?

    Lenders follow regulatory calculation rules and may treat some fees or payment dates differently. Use this tool for comparison and rely on the disclosed APR.

    What is a good APR?

    There is no single number. APRs depend on your credit, the loan type, the term and market rates. Compare several offers for the same amount and term.

    Can I use this for a credit card?

    Credit card APRs are usually quoted as a variable interest rate. This tool is built for loans with a fixed payment and optional upfront fees.

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