APR Calculator
True yearly cost of a loan including fees.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- APR
- 8.53%
- Monthly payment
- $500.95
- Total paid
- $30,056.92
- Total interest
- $5,056.92
- Fees financed
- $600.00
Working
- 1Payment on $25,000.00 at 7.5% = $500.95
- 2Solve for the rate that gives that payment on $24,400.00 → 8.53%
Quick answer
APR (annual percentage rate) is the yearly cost of a loan including upfront finance charges, not just interest. It is the rate at which your monthly payments would repay only the money you actually receive after fees. A $25,000, 5-year loan at 7.5% with $600 in fees has a $500.95 payment; repaying $24,400 with that payment implies an APR of 8.53%.
What the APR calculator does
This calculator works out the APR on a fixed-rate installment loan from the loan amount, the quoted interest rate, the term and the fees you pay to get the loan. It also shows the monthly payment, total paid and total interest at the quoted rate.
Use it to compare offers that trade a lower rate for higher fees — a common choice with mortgages (discount points), personal loans (origination fees) and auto loans. Lenders in the US must disclose APR under the Truth in Lending Act, but working it out yourself lets you test what-ifs and check a disclosure. For the payment alone, the loan payment calculator is simpler.
The calculator treats fees as prepaid finance charges: they reduce the amount you effectively borrow while the payment stays based on the full loan. Include only finance charges — origination fees, points, broker fees, prepaid interest — not costs you would pay anyway, such as an appraisal or title insurance on a mortgage.
The formula
Payment P = L × r ÷ (1 − (1 + r)^−n) APR = 12 × i × 100, where i solves (L − F) = P × (1 − (1 + i)^−n) ÷ i
| Symbol | Meaning | Unit |
|---|---|---|
| L | Loan amount (the figure your payment is based on) | $ |
| F | Prepaid finance charges: origination fees, points, broker fees | $ |
| r | Quoted annual interest rate ÷ 12 | per month |
| n | Number of monthly payments (years × 12) | months |
| i | Monthly rate that makes the payments repay L − F exactly; found by iteration | per month |
This is the actuarial method set out in the Truth in Lending Act and Regulation Z (12 CFR 1026, Appendix J). APR is annualized by multiplying the monthly rate by 12, without compounding, which is why it differs from APY. Regulation Z defines exactly which charges count as finance charges; disclosed APRs can also include items this tool does not model, such as mortgage insurance.
Worked examples
Personal loan with a flat fee
A $25,000 personal loan over 5 years at 7.5%, with $600 in origination and processing fees deducted from the funds.
Inputs
- Loan amount25000 $
- Nominal interest rate7.5 %
- Term5 years
- Fees and closing costs600 $
Result
- APR8.53%
- Monthly payment$500.95
- Total paid$30,056.92
- Total interest$5,056.92
- Fees financed$600.00
The APR is 8.53%, about a point above the quoted rate. A competing offer at 8.25% with no fees would be the cheaper loan.
Mortgage with points
A $320,000, 30-year mortgage at 6.5% with $6,400 of finance charges (one discount point plus a 1% origination fee).
Inputs
- Loan amount320000 $
- Nominal interest rate6.5 %
- Term30 years
- Fees and closing costs6400 $
Result
- APR6.7%
- Monthly payment$2,022.62
- Total paid$728,142.36
- Total interest$408,142.36
- Fees financed$6,400.00
APR is about 6.7%. Because 2% of fees are spread over 30 years, the APR gap looks small — but if you sell or refinance after 5 years, the fees cost far more per year than the APR suggests.
Short loan with a high origination fee
An $8,000, 3-year loan at 14% with a 6% origination fee ($480).
Inputs
- Loan amount8000 $
- Nominal interest rate14 %
- Term3 years
- Fees and closing costs480 $
Result
- APR18.41%
- Monthly payment$273.42
- Total paid$9,843.16
- Total interest$1,843.16
- Fees financed$480.00
The APR jumps to 18.41%. On short loans, upfront fees have a much bigger effect on APR because they are spread over fewer payments.
APR vs interest rate vs APY
These three figures are often confused but measure different things.
| Measure | What it includes | Used for |
|---|---|---|
| Interest rate (note rate) | Interest only | Calculating your monthly payment |
| APR | Interest plus prepaid finance charges, annualized without compounding | Comparing the cost of loans |
| APY | Interest with compounding, no fees | Comparing savings accounts and CDs |
| Credit card APR | The card's interest rate; card fees are disclosed separately | Interest on balances you carry |
When APR misleads
- Paying off early: APR spreads fees over the full term. If you repay or refinance sooner, the effective yearly cost of those fees is much higher. A 30-year mortgage kept for 5 years makes high-point offers look better than they are.
- Adjustable-rate loans: the disclosed APR assumes the rate follows today's index, which is unlikely over 30 years.
- Different terms: a 3-year loan and a 5-year loan with the same APR do not cost the same in dollars — the longer loan charges more total interest.
- Fees left out: some costs, such as late fees or appraisal fees on a mortgage, are not part of APR. Compare full loan estimates side by side.
Should you pay points to lower the rate?
One discount point usually costs 1% of the loan amount and lowers the rate by an amount the lender sets — often around a quarter of a percentage point, but it varies. Divide the cost of the points by the monthly payment saving to find the break-even month. If you expect to keep the loan longer than that, the points pay off.
The refinance break-even calculator runs the same logic for refinancing costs, and the mortgage payment calculator shows the payment at each rate.
How to use the APR Calculator
- 1Enter the loan amount from the offer — the figure the payment is calculated on.
- 2Enter the quoted interest rate (the note rate, not the APR) and the term in years.
- 3Add up the finance charges: origination or processing fees, discount points, broker fees and prepaid interest. Leave out appraisal, title and recording costs.
- 4Read the APR and compare it with other offers for the same term; check the total paid as well.
Frequently asked questions
Why is APR higher than the interest rate?
Because APR includes upfront fees. You repay the full loan amount but receive less cash after fees, so the effective rate on the money you actually got is higher.
Is a lower APR always the better loan?
For loans of the same term that you keep to the end, usually yes. If you might repay early, a loan with lower fees can be cheaper even with a slightly higher APR.
What is a good APR for a personal loan?
It depends heavily on your credit score and the current rate environment. Borrowers with excellent credit get the lowest offers, while fair-credit borrowers can see APRs two or three times higher. Compare prequalified offers from several lenders.
Can APR be the same as the interest rate?
Yes, when there are no finance charges. A loan with no origination fee or points has an APR equal to its interest rate.
How is APR different from APY?
APR annualizes a monthly rate by multiplying by 12 and includes fees; APY includes compounding and no fees. The APY calculator converts a nominal rate to its compounded yield.
References
- Regulation Z (Truth in Lending), 12 CFR Part 1026 — Consumer Financial Protection Bureau
- What is the difference between a loan interest rate and the APR? (Ask CFPB) — Consumer Financial Protection Bureau
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
- Report an error