APR Calculator

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Options — term unit
APR —
Monthly payment — from the note rate
Interest + fees — total cost of borrowing

The interest rate sets your payment, but the APR tells you the true cost of a loan once up-front fees and points are folded in — which is why it is almost always higher than the quoted rate. This calculator sizes your monthly payment from the note rate, deducts your fees from what you actually receive, then solves for the annual rate that reconciles the two. Compare the APR against the note rate to see how much the fees really cost, and compare APRs across offers to find the cheapest loan — a low rate with big fees can lose to a higher rate with none.

How to Calculate APR

The rate, the fees, and what you actually receive.

1

Enter loan and rate

Type the loan amount, the quoted note interest rate and the term in years or months.

2

Add fees and points

Enter the up-front finance charges — origination, points and closing fees paid to get the loan.

3

Compare APR to the rate

See the true APR next to the note rate, the monthly payment, and the total cost of borrowing.

Why APR Is the Number to Compare

A low rate with big fees can cost more.

Your monthly payment comes from the note rate, so it is tempting to shop on rate alone. But fees change the real cost: pay points and closing costs and you receive less money than you are repaying interest on, which lifts the effective annual rate above the quoted one. That lifted figure is the APR, and it is designed to be compared apples-to-apples across offers.

The practical upshot: a loan advertised at a low rate but loaded with fees can have a higher APR — and cost you more — than one with a slightly higher rate and no fees. Enter both offers and compare their APRs, not their headline rates. The gap between the APR and the note rate on this page is a direct read on how much those up-front fees are really worth over the life of the loan.

Frequently Asked Questions

What is APR?
APR, the annual percentage rate, is the yearly cost of borrowing expressed as a percentage that includes not just the interest rate but the up-front fees folded in. Because two loans with the same interest rate can cost very different amounts once one charges points and closing fees, APR was designed as a single comparable figure: it is the rate which, applied to the amount you actually receive after fees, produces the same payment stream as the loan. That makes it almost always higher than the quoted note rate. This calculator computes APR by finding the rate that equates your payments to the loan amount minus fees, and everything runs in your browser.
What is the difference between APR and the interest rate?
The interest rate — often called the note rate — is what generates your monthly payment on the loan balance; the APR is a broader measure of cost that also captures up-front fees. Your payment is calculated from the note rate, so a lower note rate always means a lower payment. But if that low rate came with hefty points and fees, the APR reveals the true cost is higher than the rate suggests. APR is therefore the better number for comparing offers head to head: a loan with a slightly higher rate but no fees can have a lower APR — and be cheaper overall — than one with a teaser rate and expensive closing costs. This tool shows both so you can see the gap.
What fees are included in APR?
APR generally includes the finance charges you must pay to get the loan — things like discount points, origination or processing fees, and certain closing costs — but not third-party charges you would pay regardless, such as some title or recording fees, or optional add-ons. The exact list is defined by lending regulations and varies by loan type, so a lender's official APR may differ slightly from a simple estimate depending on which fees they include. In this calculator you enter a single Fees figure, and it treats that whole amount as deducted from the loan proceeds, then solves for the rate. For an exact, legally binding APR, rely on the truth-in-lending disclosure your lender provides; use this tool to compare offers and sanity-check a quote.
What is the difference between APR and APY?
APR and APY sound similar but sit on opposite sides of a transaction. APR, the annual percentage rate, measures the cost of borrowing and includes fees but not the effect of compounding. APY, the annual percentage yield, measures the return on savings and includes compounding but not fees. When you borrow, compare APRs; when you save, compare APYs. The two would only line up in the special case of no fees and annual compounding. If you are looking at a savings account or CD instead of a loan, our APY Calculator is the right tool; this page is for the borrowing side, where fees, not compounding frequency, are what pull the true rate away from the quoted one.
Why is my APR higher than my interest rate?
Because the fees you paid up front mean you received less money than you are repaying interest on, which raises the effective rate. If you borrow $200,000 at a 6% note rate but pay $4,000 in points and fees, you only walk away with $196,000 — yet your payments are still sized for the full $200,000 balance. Spreading that extra $4,000 cost across the life of the loan lifts the true annual rate above 6%, and that lifted figure is the APR. The more fees you pay relative to the loan, and the shorter the term over which they are spread, the larger the gap between the note rate and the APR. A loan with zero fees has an APR equal to its interest rate.

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