Finance
APR Calculator
Calculate the true Annual Percentage Rate of any loan including fees, and compare with the base interest rate to understand the real cost of borrowing.
Enter loan details and click Calculate
How is this calculated?
APR Calculation:
1. Effective Loan = Loan Amount - Fees
2. Monthly Payment = P × [r(1+r)^n] / [(1+r)^n – 1] (based on full loan amount)
3. APR = rate where PV of payments at that rate = Effective Loan Amount
Solved iteratively using Newton's method
Difference = APR - Interest Rate
Total Cost = Monthly Payment × n
Total Interest = Total Cost - Loan AmountFAQ
Frequently asked questions about APR
What is APR and how is it different from interest rate?
APR (Annual Percentage Rate) includes the base interest rate plus fees and other costs spread over the loan term. It gives you the true cost of borrowing, while the interest rate alone only reflects the cost of the principal.
How is APR calculated?
APR is calculated by finding the rate that makes the present value of all payments equal to the loan amount minus fees. It accounts for origination fees, closing costs, and other charges over the loan term.
Why is APR always higher than the interest rate?
APR includes additional costs like origination fees, discount points, and closing costs. These extra charges increase the effective annual cost of borrowing above the stated interest rate.
What is a good APR for a personal loan?
A good APR depends on your credit score and market conditions. Generally, APRs below 10% are considered good for personal loans, while rates above 20% are high. Compare multiple offers to find the best rate.
Does APR include compound interest?
APR assumes simple interest calculation spread over the year. It does not account for compounding within the year. For compounding effects, look at APY (Annual Percentage Yield) instead.
Is this APR calculator free to use?
Yes, completely free with no sign-up required. All calculations happen in your browser — your financial data is never sent to any server.