Finance Tools
APR Calculator
Calculate Annual Percentage Rate (APR) for loans including interest rate and fees. Compare APR vs interest rate, understand true loan cost, and calculate effective APR with closing costs for mortgages, auto loans, and personal loans.
Use APR Calculator to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
Your results will appear here.
About this tool
Calculate the true Annual Percentage Rate (APR) of your loan including all fees and costs. APR is the total yearly cost of a loan expressed as a percentage, including both the interest rate and any upfront fees like origination fees, closing costs, or points. Understanding APR helps you compare loans from different lenders fairly.
The difference between interest rate and APR is crucial: the interest rate is what you pay on the borrowed amount, while APR includes the interest rate plus all loan fees spread over the loan term. For example, a 5% interest rate loan with $3,000 in fees might have a 5.5% APR. APR gives you the "true cost" of borrowing.
Lenders are required by federal law (Truth in Lending Act) to disclose APR on loans, making it the best metric for comparing different loan offers. A loan with a lower interest rate but high fees might have a higher APR than a loan with a slightly higher interest rate but no fees. Always compare APRs when shopping for mortgages, auto loans, or personal loans.
Our APR calculator uses the standard APR formula to compute the effective annual rate including all costs. This helps you understand what you're truly paying and compare offers apples-to-apples. All calculations are performed in your browser with complete privacy - no loan information is stored or transmitted.
Usage examples
$200,000 Mortgage with $3,000 Closing Costs
30-year mortgage at 6% interest with fees
Interest Rate: 6% | With $3,000 fees over 30 years: APR = 6.14% | Fees add 0.14% to effective rate
$25,000 Auto Loan with $500 Origination Fee
5-year car loan at 4.5% with fees
Interest Rate: 4.5% | With $500 fee over 5 years: APR = 4.92% | Fees add 0.42% to effective rate
Zero-Fee Personal Loan
$10,000 loan at 8% with no fees
Interest Rate: 8% | No fees: APR = 8% | APR equals interest rate when there are no fees
How to use
- Enter the loan amount (principal)
- Input the loan term in years
- Enter the interest rate (not APR - the base rate)
- Add total loan fees (origination fee, closing costs, points, etc.)
- Click "Run Tool" to calculate the true APR
- Compare APR vs interest rate to see the impact of fees
Benefits
- Calculate true APR including all loan fees and closing costs
- Compare APR vs interest rate side-by-side
- Understand the real cost of borrowing
- See how fees impact your effective rate
- Works for mortgages, auto loans, personal loans, any loan type
- Federal Truth in Lending Act compliant calculations
- Helps you compare loans from different lenders fairly
- No registration required - complete privacy
- Free forever with unlimited calculations
FAQs
What is APR and how is it different from interest rate?
APR (Annual Percentage Rate) is the total yearly cost of a loan including interest plus fees, expressed as a percentage. The interest rate is just the cost of borrowing the principal. APR is always equal to or higher than the interest rate because it includes additional costs like origination fees, points, and closing costs. For example, a 6% interest rate with $2,000 in fees might have a 6.2% APR.
Why is APR higher than my interest rate?
APR is higher because it includes upfront fees spread over the life of the loan. These fees include origination fees, discount points, closing costs, and other charges. The more fees you pay upfront, the higher your APR will be compared to the interest rate. A loan with zero fees will have an APR equal to the interest rate.
How do I calculate APR from interest rate and fees?
APR calculation is complex and uses an iterative process. Generally: 1) Calculate monthly payment from interest rate, 2) Subtract fees from loan amount to get net proceeds, 3) Find the rate that makes the present value of payments equal to net proceeds. Our calculator does this automatically. The key insight: fees effectively increase your rate because you receive less money but pay the same amount.
Should I choose a loan with lower APR or lower interest rate?
Always choose the loan with lower APR if you're keeping the loan for its full term. APR accounts for all costs. However, if you plan to pay off or refinance the loan early, sometimes a higher APR with lower fees can be better because you won't spread those upfront fees over as many payments. Use our calculator to compare both scenarios.
What fees are included in APR?
APR includes: origination fees, discount points, broker fees, some closing costs, and any prepaid interest. APR does NOT include: appraisal fees, credit report fees, title fees, or other third-party charges. Lenders must disclose which fees are included in their APR calculation under the Truth in Lending Act.
Is APR the same as APY?
No. APR (Annual Percentage Rate) is for loans and credit - it's what you pay to borrow. APY (Annual Percentage Yield) is for savings and investments - it's what you earn, including compound interest. APR doesn't account for compounding, while APY does. For borrowing, use APR. For saving, use APY.
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