APR Calculator
Calculate the true Annual Percentage Rate (APR) including all fees and costs. Understand the real cost of borrowing and make informed loan comparisons.
Loan Details
APR Calculation
Enter your loan details and fees to calculate the true Annual Percentage Rate (APR).
How to Use the APR Calculator
- Enter Loan Amount: Input the principal amount you're borrowing
- Set Interest Rate: Enter the nominal interest rate quoted by the lender
- Choose Loan Term: Select the loan duration in years
- Select Payment Frequency: Choose how often you'll make payments
- Add All Fees: Include origination fees, closing costs, points, and other charges
- Calculate APR: See the true cost including all fees and compare with the interest rate
- Compare Loans: Use APR to make accurate comparisons between different loan offers
APR vs Interest Rate: What's the Difference?
Interest Rate
The interest rate is the cost of borrowing the principal amount, expressed as a percentage.
APR (Annual Percentage Rate)
APR represents the true annual cost of borrowing, including interest and most fees.
Key Insight
If two loans have the same interest rate but different fees, the one with lower APR is actually cheaper. Always compare APRs, not just interest rates, when shopping for loans.
Common Fees Included in APR
Mortgage Fees
Personal Loan Fees
What's NOT Included in APR
Truth in Lending Act (TILA)
What is TILA?
The Truth in Lending Act is a federal law that requires lenders to disclose the true cost of credit to consumers in a standardized way, making it easier to compare loan offers.
Required Disclosures
When You Receive Disclosures
APR Examples: Why It Matters
Here's how fees can significantly affect the true cost of borrowing:
Example: $300,000 Mortgage Comparison
| Lender | Interest Rate | Fees | APR | Monthly Payment |
|---|---|---|---|---|
| Bank A | 6.500% | $0 | 6.500% | $1,896 |
| Bank B | 6.250% | $3,000 | 6.350% | $1,847 |
| Bank C | 6.125% | $6,000 | 6.325% | $1,823 |
High-Fee Loan Impact
No-Fee Loan
Smart Shopping Tips
What to Do
Red Flags
Frequently Asked Questions
Why is my APR higher than my interest rate?
APR includes your interest rate plus most loan fees spread over the loan term. The more fees you pay upfront, the higher your APR will be compared to your interest rate. This gives you a more accurate picture of the loan's total cost.
Can APR be lower than the interest rate?
In rare cases, yes. This can happen with adjustable-rate mortgages where the initial rate is below the fully-indexed rate, or when lender credits offset loan fees. However, for most fixed-rate loans with fees, APR will be higher than the interest rate.
Which should I use to compare loans?
Always compare APRs when evaluating similar loan products from different lenders. APR gives you the most accurate comparison of total borrowing costs. However, also consider the actual monthly payment amount and loan terms that fit your budget and needs.
Do credit cards have APR?
Yes, credit cards are required to disclose APR. For credit cards, the APR is typically the same as the interest rate since most fees aren't included in the APR calculation. However, promotional rates and penalty APRs may also be disclosed.
How accurate is this APR calculator?
This calculator provides a close approximation using standard APR calculation methods. However, some loans have complex fee structures or timing that may affect the exact APR. Always verify the APR with your lender's official Truth in Lending disclosures.