APR Calculator

The interest rate on a loan tells you part of the cost. The APR (Annual Percentage Rate) tells you the full cost — including origination fees, points, and other upfront charges — expressed as a single annualized rate. This calculator converts your loan's stated rate and fees into the true APR so you can compare loans apples-to-apples.

How APR Is Calculated

APR is the internal rate of return of all loan cash flows: you receive the loan amount, net of fees, and repay fixed monthly payments over the term. Mathematically, it's the monthly rate r such that the present value of n payments of PMT equals the net proceeds (loan amount minus fees), annualized to an annual rate. This is why a loan with $3,000 in fees on a $300,000 loan shifts the APR only slightly — but the same $3,000 in fees on a $30,000 loan shifts it significantly.

APR vs. Interest Rate: What Each Tells You

The stated interest rate determines your monthly payment — APR does not change the payment, only the measure of cost. APR is most useful when comparing two loans with different rate/fee combinations. Lender A might offer 6.5% with $0 fees; Lender B might offer 6.25% with $4,000 in points. APR reveals which is truly cheaper over the full loan term. This calculator shows the APR for any rate + fee combination you enter.

When APR Comparison Has Limits

APR assumes you hold the loan to maturity. If you refinance or sell in year 5 of a 30-year mortgage, you pay the full upfront fees but only 5 years of interest — making a high-fee, low-rate loan relatively more expensive than its APR suggests. For shorter expected hold periods, paying attention to fees separately (not just APR) is important.

Related Calculators

To see how the monthly payment APR produces affects your budget, see our paycheck calculator. To evaluate refinancing into a lower rate, use the refinance calculator and compare APRs across your current and new loan.