APR Calculator
Find the annual percentage rate of a loan after origination fees and points, the effective annual rate, and how the cost changes if you repay the loan early.
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About this toolWhat is the APR Calculator?
The APR Calculator shows what a loan really costs once up-front charges are included. Enter the loan amount, the note rate, the term and the finance charges: origination and lender fees plus discount points. It returns the annual percentage rate, the monthly payment, the amount financed and the effective annual rate.
Fees can be paid at closing (or deducted from the money you receive) or added to the loan balance. Either way you get the same amount of usable money and pay a rate on it that is higher than the note rate, and the calculator solves for that rate.
Because APR assumes you keep the loan to the end, a table also shows the effective cost if you repay after 3, 5, 7 or 10 years, which is what usually happens with mortgages.
- APR solved from payments and the amount financed
- Fees and points paid at closing or financed
- Effective annual rate of the APR and of the note rate
- Effective cost if repaid after 3, 5, 7 or 10 years
- Term in years or months
How to use the APR Calculator
- Enter the loan amount and the interest (note) rate.
- Enter the term in years or months.
- Enter origination and lender fees, and discount points as a percentage of the loan.
- Choose whether fees are added to the loan balance or paid at closing.
- Read the APR, the effective annual rate and the early-repayment table.
Worked examples
Mortgage with fees and a point
Input
250,000 at 6.5% for 30 years; 3,500 fees; 1 point
Output
Payment 1,580.17; finance charges 6,000; APR 6.735%; effective annual 6.947%
You repay a 250,000 loan but effectively receive 244,000, so the true rate is about 0.24 points higher. Repaid after 5 years, the cost rises to 7.088% because the fees are spread over fewer years.
Personal loan with an origination fee
Input
10,000 at 9% for 36 months; 400 fee taken from proceeds
Output
Payment 318.00; APR 11.812%; effective annual 12.473%
A 4% fee on a short loan adds almost three points to the rate. Short terms make fees much more expensive in APR terms than long ones.
Background and insight
In the US, the Truth in Lending Act and Regulation Z require lenders to state an APR so loans with different fees can be compared. The APR is the interest rate at which the present value of all the payments equals the amount financed, which is the loan minus prepaid finance charges. Regulation Z Appendix J describes this actuarial method; the calculator finds the rate numerically by bisection, accurate to well below a thousandth of a percent.
What counts as a finance charge is set by the rules. For a residential mortgage, points, origination fees, mortgage broker fees and similar lender charges are included; appraisal, credit report, title and recording fees generally are not. Enter only the finance charges, or the APR will be overstated.
APR is still a nominal annual rate: the monthly rate times 12. The effective annual rate (EAR or APY for savings) compounds it: (1 + APR/12)^12 − 1. A 6.735% APR is a 6.947% effective rate. Credit card APRs and many personal loan APRs have no fees, so for them APR equals the note rate and only the effective rate differs.
Common use cases
Comparing loan offers
Put a low-rate, high-fee offer and a higher-rate, no-fee offer on the same footing.
Deciding whether to buy points
See the APR with and without points and how the early-repayment table changes.
Checking a disclosure
Reproduce the APR on a Loan Estimate or a personal loan offer.
Personal and auto loans
Measure what an origination fee does to a short loan.
Tips and limitations
- APR assumes you keep the loan for the full term. If you expect to sell or refinance in five years, look at the early-repayment column instead.
- Mortgage APRs on Loan Estimates may differ slightly because they include prepaid interest and mortgage insurance in the finance charge.
- A 0% loan with a fee still has a positive APR; the calculator handles that case.
- Use the Mortgage Calculator for the full monthly payment with tax and insurance; APR covers financing costs only.
- This calculator follows the US Regulation Z definition. Other countries use similar measures under other names, such as APRC in the UK and EU.
Frequently asked questions
What is the difference between interest rate and APR?
The interest rate sets your payment. The APR also counts up-front finance charges, such as origination fees and points, by finding the rate at which your payments repay only the money you actually received. On 250,000 at 6.5% with 6,000 of charges, the APR is 6.735%.
How do you calculate APR with fees?
Compute the payment on the loan at the note rate, subtract the fees from the loan to get the amount financed, then find the monthly rate i that makes the present value of the payments equal the amount financed. APR is 12 × i. It has no closed form, so it is solved numerically.
Is a lower APR always the better loan?
Over the full term, yes. If you will repay early, not necessarily: a loan with high fees and a low rate has a low APR but a higher cost over a short holding period. The early-repayment table shows this; on the default mortgage the cost after 3 years is 7.409% against an APR of 6.735%.
Do discount points count in APR?
Yes. Points are prepaid interest and are part of the finance charge, so they raise the APR even though they lower the note rate. Whether they pay off depends on how long you keep the loan.
What is the difference between APR and effective annual rate?
APR is a nominal rate: the monthly rate multiplied by 12. The effective annual rate compounds it: (1 + APR/12)^12 − 1. An APR of 12% is an effective rate of 12.68%.
Which closing costs are included in a mortgage APR?
Lender charges such as origination, underwriting and broker fees, discount points, prepaid interest and mortgage insurance are typically included. Third-party charges like appraisal, credit report, title insurance and recording fees usually are not. Your Loan Estimate lists the finance charge separately.
Is there an in-depth guide to the APR Calculator?
Yes. “Mortgage Maths: Payments, PMI, Affordability, Refinancing and APR” covers the background, how it works, common pitfalls and worked examples. Read the full guide.
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