APR Calculator

Calculate the Annual Percentage Rate (APR) of a loan including all fees and costs.

$
%

Fees Included in APR

$
$
pts

Nominal Rate

6.500%

APR (with fees)

7.347%

Fees add +0.847% to the effective rate
Monthly Payment$489.15
Total Interest$4,349.22
Total Fees$500.00
Total Cost of Loan$29,849.22

How to Calculate APR

APR (Annual Percentage Rate) represents the true yearly cost of a loan, including both interest and fees. It is always higher than the nominal interest rate when fees are present.

  1. Enter the loan amount, interest rate, and term.
  2. Add all fees - origination fees, application fees, points. Fees that are financed into the loan (not paid upfront) should NOT be included here.
  3. The calculator solves for the APR using the same monthly payment amount but a lower effective loan amount (principal minus fees).

APR Formula

APR is the interest rate r where:

(Principal - Fees) = Payment x [1 - (1+r)^(-n)] / r

Where:
r = monthly APR (APR/12)
n = number of payments
Payment = based on nominal interest rate

Solved numerically (Newton's method)
since r cannot be isolated algebraically.

Frequently Asked Questions

The interest rate is the cost of borrowing the principal, expressed as a yearly percentage. APR (Annual Percentage Rate) includes the interest rate plus lender fees (origination fees, points, mortgage insurance) expressed as a yearly rate. A loan with a 6.5% interest rate and $3,000 in fees on a $200,000 30-year mortgage might have an APR of 6.74%. APR is what you use when comparing loan offers from different lenders.

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