APR Calculator
This APR calculator finds the annual percentage rate of a loan, the yearly rate that counts both the interest and the fees you pay to borrow. Enter the loan amount, the stated interest rate, the term, and the fees, and the APR calculator shows the APR, the monthly payment, and the true cost of the loan, so you can compare offers on equal terms.
Results
The APR Calculator is part of our Loans & Credit collection. Browse more loans & credit to size, convert, and check your work alongside this tool.
What the APR calculator does
Lenders quote an interest rate, but most loans also carry an origination fee, a processing charge, or other costs. The annual percentage rate folds those fees into one yearly figure. The APR calculator works out the monthly payment on the stated rate, then finds the rate at which those same payments repay only the cash you received after fees. That rate is the APR, and it is always at or above the stated rate when fees apply.
APR formula
The calculator first finds the monthly payment on the stated rate rs:
B is the balance the payments repay: the loan amount, or the loan plus fees when fees are financed. It then searches for the monthly rate r that makes the present value of those payments equal to the cash you received:
The APR is 12 × r. There is no closed formula for r, so the calculator solves it numerically to three decimal places.
APR calculator example
A $20,000 personal loan at 7% for 5 years with a $500 origination fee taken out of the loan:
You receive $19,500 but repay $23,761.44, so the total cost of credit is $4,261.44: $3,761.44 of interest plus the $500 fee. If the fee is added to the balance instead, the payment rises to $405.92 and the APR is 8.041%.
How to use the APR calculator
Enter the loan amount, the interest rate the lender quotes, and the term in years. Add every upfront charge: origination fees, processing fees, and any points. Choose whether the fees are paid at closing or deducted from the loan, or added to the balance. Press Calculate to see the APR, the monthly payment, and the total cost of credit.
Reading your APR calculator result
The gap between the APR and the stated rate shows how much the fees cost you in yearly terms. A gap of a quarter point or less means modest fees; a full point or more on a short loan means the fees are heavy. Compare loans by APR, not by the quoted rate, because a lower rate with large fees can cost more. The effective annual rate goes one step further and compounds the monthly rate, so it reads slightly higher than the APR.
When to use an APR calculator
- Comparing personal loan offers with different fees
- Checking the APR printed on a loan disclosure
- Seeing how an origination fee changes the true cost
- Deciding whether to pay fees upfront or finance them
- Comparing a short loan with a long one
Common APR calculator mistakes
- Leaving out fees. Every upfront charge belongs in the APR.
- Comparing APR across different terms alone. Check the total cost too.
- Confusing APR with APY. APY is for savings and includes compounding.
- Ignoring optional add-ons. Insurance sold with a loan raises the real cost.
Tips for using an APR loan calculator
- Ask each lender for the APR in writing.
- Compare offers with the same term.
- Pay fees upfront if you can; financing them adds interest.
APR vs interest rate on real offers
Take two offers for $20,000 over 5 years. Lender A quotes 7% with a $500 fee, and Lender B quotes 7.5% with no fee. Lender B has an APR of exactly 7.5% and a payment of $400.76. Lender A has a lower payment of $396.02 but an APR of about 8.07%, because you only receive $19,500. Lender B is cheaper even though its rate looks higher. The loan payment calculator shows the full schedule for either offer.
How to calculate APR when fees change
A fee is paid once, so its effect on APR depends on the term. Spread over 60 months, $500 adds about a point to a 7% loan; spread over 12 months it adds far more. That is why short loans with flat fees, such as some payday and installment loans, show very high APRs. For loans with a lump sum at the end, the balloon car loan calculator shows how the final payment changes the interest. When a loan charges flat interest on the original balance, use the simple interest calculator to see the real rate.
APR calculator with fees: $20,000 at 7% with a $500 fee
The same fee costs far more on a short loan, because it is spread over fewer payments:
| Term | Monthly payment | APR |
|---|---|---|
| 1 year | 1,730.53 | 11.78% |
| 2 years | 895.45 | 9.51% |
| 3 years | 617.54 | 8.72% |
| 5 years | 396.02 | 8.07% |
| 7 years | 301.85 | 7.79% |
APR Calculator FAQ
How do you calculate APR on a loan?
Work out the payment on the stated rate, then find the rate at which those payments repay only the cash you received after fees. That rate times 12 is the APR. On $20,000 at 7% for 5 years with a $500 fee it is 8.07%.
What is the difference between APR and interest rate?
The interest rate prices the money you borrow. The APR adds the fees and spreads them over the term, so it shows the full yearly cost.
Is a lower APR always better?
For loans of the same length, yes. Across different terms, also compare the total cost, because a longer loan can have a lower APR but more interest.
Does APR include compounding?
APR is the monthly rate times 12. The effective annual rate compounds it and reads a little higher.