APR Calculator

The annual percentage rate (APR) is the truest single measure of a loan's real cost, because it rolls up-front fees and points into the interest rate and expresses the total as one annual percentage. Two loans with the same note rate can have very different APRs once their fees are included, which is exactly why lenders are required to disclose it.

This calculator finds the APR from your loan amount, note rate, term, and up-front costs, so you can compare offers with different rate-and-fee combinations on a level field.

How does this calculator work?

Enter the loan amount, note rate, term, and any up-front fees and points. The calculator finds the true APR: the rate that accounts for those fees on top of the interest rate.

Use it to compare loan offers, such as a personal loan, that have different combinations of rate and fees: the lower APR is generally cheaper if you keep the loan to term.

Fees don't all work the same way. Up-front fees, like the ones in the example below, are paid at closing: they reduce the cash you actually receive without changing your loan balance. Fees included in the loan are added directly to the amount you borrow instead, so you finance them along with the rest of the loan and pay interest on that extra balance for the full term.

Worked example

A $200,000, 30-year mortgage loan at a 6.5% note rate with $4,000 in up-front fees.

Loan amount

$200,000

Note rate / term

6.5% / 30 yrs

Up-front fees

$4,000

Monthly payment

$1,264.14

APR

6.6953%

How the numbers work

The $1,264 payment is set by the 6.5% note rate on the full $200,000 over 360 months.

The APR then asks what single rate, charged on the $196,000 you actually receive after $4,000 in fees, would generate that same payment. That works out to 6.6953%: the fees act like extra interest spread across the loan, lifting the effective rate 0.1953 percentage points above the note rate.

The fees push the effective cost from a 6.5% note rate to a 6.6953% APR. That 0.1953-percentage-point gap is what a borrower comparing only headline rates would miss.

Paying fees up front vs. financing them

Financing the same $4,000 in fees instead of paying them up front raises the payment to $1,289.42, since interest now accrues on $204,000 instead of $200,000, but the APR comes out to 6.6914%, slightly lower than the 6.6953% from paying up front. That is because APR measures cost against the cash you actually receive: financing the fees leaves the full $200,000 in your hands today, so the same dollar cost works out to a marginally lower rate against that larger amount received.

APR assumes you hold the loan for its full term. Pay it off early and the fees weigh more heavily, making the effective rate higher than the quoted APR.