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APR Calculator

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The annual percentage rate (APR) reflects the true cost of a loan by factoring in upfront fees, not just the stated interest rate. Two loans with the same interest rate can have different APRs if their fees differ — this calculator shows you the real number to compare offers by.

APR Calculator

Live
True APR
7.27%
Stated rate
6.00%
Monthly payment
$193.33
The bigger the gap between stated rate and APR, the more fees are inflating the real cost.

Why APR is higher than the stated rate

Your payment is calculated using the stated rate on the full loan amount. But since fees are deducted upfront, you effectively only receive (loan amount − fees) in usable funds — while still repaying based on the full amount. APR finds the rate that makes those two realities match, which is always higher than the stated rate whenever fees are present.

Example

A $10,000 loan at a stated 6% rate over 5 years, with $300 in fees: monthly payment ≈ $193.33 (based on the stated rate on $10,000), but you only receive $9,700 upfront. Solving for the rate that matches those payments to $9,700 gives a true APR of about 7.27% — noticeably higher than the stated 6%.

Step-by-step guide

  1. Enter the loan amount and the stated interest rate.
  2. Enter any upfront fees — origination fees, points, or similar costs deducted before you receive the funds.
  3. Enter the loan term and compare the APR to the stated rate — and to other loan offers.

Common mistakes

Comparing loan offers by stated rate alone — a lower stated rate with high fees can have a higher true APR than a slightly higher rate with low fees.
Assuming all fees are included in APR calculations by lenders — some fees (like certain optional insurance products) aren't required to be included, so always ask exactly what's factored in.

Frequently asked questions

Is APR the same for all loan types?

The concept is the same, but exactly which fees must be included in the APR calculation can vary by loan type and jurisdiction. Mortgage APR calculations, for instance, follow specific disclosure rules that may differ from a personal loan's.

Should I always choose the lowest APR?

It's a strong comparison tool, but also consider how long you'll keep the loan — a higher-fee, lower-rate loan might have a higher APR over a short period but cost less if held to full term. Read the fine print on any fees not included in the APR.

Why does the APR change if I adjust the term?

The same upfront fee is spread over fewer or more payments depending on the term, which changes how much it affects the annualized rate — shorter terms tend to show a bigger APR-vs-stated-rate gap for the same fee.

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