📑 APR Calculator
Calculate the true Annual Percentage Rate (APR) of a loan including all fees. See how origination fees and other charges increase your effective borrowing cost beyond the stated interest rate.
APR Calculation Method
APR is found by solving for the monthly rate r such that the present value of all payments equals the effective loan amount (loan minus upfront fees). We use binary search to find this rate precisely.
Real-World Example
$10,000 loan, 8% nominal rate, 36 months, $200 origination fee:
How Fees Increase Your APR
- 1Fees reduce the amount you actually receive while keeping payments the same.
- 2On short-term loans, fees have a much larger APR impact than on long-term loans.
- 3Always compare APR — not just the stated rate — when shopping for loans.
Frequently Asked Questions
APR (Annual Percentage Rate) is the true cost of borrowing money on a yearly basis, expressed as a percentage. Unlike a simple interest rate, APR includes fees and other charges associated with the loan, giving you a more accurate picture of the loan's total cost.
The interest rate is the cost of borrowing the principal loan amount. APR is a broader measure that includes the interest rate plus any fees (origination fees, broker fees, mortgage points, etc.) expressed as a yearly rate. APR is always equal to or higher than the interest rate.
Fees increase APR because they add to the cost of the loan without increasing the amount you receive. The shorter the loan term, the greater the impact of fees on APR. A $200 fee on a 12-month loan has a much larger APR impact than the same fee on a 60-month loan.
Generally yes, but context matters. A loan with a low APR but unfavorable prepayment penalties or variable rates may be worse in practice. Also, if you plan to pay off the loan early, a higher rate with lower fees might actually cost less than a low rate with high upfront fees.
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