APR Calculator
Calculate the Annual Percentage Rate (APR) of a loan including fees. Compare loan offers and understand the true cost of borrowing.
$
%
Years
$
Results
APR
7.08%
Monthly Payment
$483.32
Total Interest
$3,999.20
Total Fees + Interest
$4,499.20
How is APR Calculated?
APR (Annual Percentage Rate) reflects the true yearly cost of a loan, including fees. It is higher than the nominal interest rate because it factors in origination fees and other charges spread across the loan term.
Where n = payments per year, I = total interest + fees, P = principal, N = total payments
Example
A $25,000 loan at 6% for 5 years with $500 in fees has a monthly payment of about $483. The total interest is roughly $3,988. Adding $500 in fees, the APR comes out to approximately 6.8%, which is higher than the 6% nominal rate.
Common Use Cases
- Comparing loan offers from different lenders on an apples-to-apples basis.
- Understanding the true cost of a mortgage, auto loan, or personal loan.
- Evaluating whether refinancing would save you money.
FAQs
What is the difference between APR and interest rate?
The interest rate only covers the cost of borrowing the principal. APR includes the interest rate plus fees and other loan costs, giving a more complete picture of what you'll pay.
Is a lower APR always better?
Generally yes, but also consider the loan term, total cost, and any prepayment penalties. A lower APR with a much longer term could cost more overall.