🧾 APR Calculator

How the APR Calculator Works

The annual percentage rate (APR) shows the yearly cost of a loan including required upfront fees, not just the interest rate. When a lender charges an origination fee or other finance charges, you receive less money than the loan amount but still repay the full amount with interest. The APR is the rate at which the payments you make exactly repay the money you actually received.

This calculator first works out the monthly payment from the loan amount, interest rate, and term. It then finds the rate that makes those same payments equal to the loan amount minus the fees. The result is the APR in the sense used by US Truth in Lending disclosures, for a standard fixed-payment loan. Lenders include different fees in APR, so use the fees they list as finance charges.

Formula

Monthly payment M = L × i ÷ (1 − (1 + i)^−n),  i = interest rate ÷ 12
Amount received  = L − upfront fees
APR: find j such that  M × (1 − (1 + j)^−n) ÷ j = Amount received;  APR = j × 12
L = loan amount, n = number of monthly payments

The APR equation has no closed-form solution, so the calculator solves it numerically (bisection) to four decimal places.

How to Use It

1. Enter the loan amount and the stated interest rate.
2. Enter the loan term in months.
3. Enter the upfront fees that count as finance charges (origination, points, etc.).
4. Compare the APR with the interest rate.

Frequently Asked Questions

Why is APR higher than the interest rate?

Because APR spreads upfront fees over the life of the loan. You repay the full loan amount but receive less after fees, so the effective yearly cost is higher than the stated rate.

Which fees are included in APR?

Typically finance charges such as origination fees, discount points, and some closing costs. Rules on what must be included vary by country and loan type; lenders list them in their disclosures.

Does a shorter loan term change the APR?

Yes. The same fee spread over fewer payments raises the APR more, so a fee has a bigger APR impact on a short loan than on a long one.

Is APR the best way to compare loans?

APR is useful for comparing loans with the same term. For different terms, also compare the monthly payment and the total amount repaid.

Related Glossary Terms

Related Calculators

• ⚖️ Loan Comparison Calculator — Compare two loan offers side by side: payment, total interest, fees, and total cost.
• 💳 Loan Calculator (EMI) — Works for any loan type — find your monthly payment and total interest.
• 📅 Amortization Schedule Calculator — See your full year-by-year loan breakdown and what an extra payment saves.
• 📈 APY Calculator — Convert an interest rate to APY for any compounding frequency, and see a year’s interest.

Formula and content last reviewed: September 2026. All calculations run in your browser — nothing you enter is sent to or stored on our servers.