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APR Calculator
True APR Pro
Advanced annual percentage rate analysis
Loan Terms
$
%
Upfront Fees
$
%
Effective APR
0.00%
Monthly Payment
$0.00
Total Fees Paid
$0.00
About the APR Calculator
APR (Annual Percentage Rate) shows the true yearly cost of a loan once fees and points are included, so you can compare offers fairly.
How to use the APR Calculator
- Enter the Loan Amount, Interest Rate (%) and Term (Years).
- Enter Flat Fees ($) and Points (%).
- Press Calculate to see the APR.
Formula and method
APR is the interest rate that makes the present value of all monthly payments equal to the amount you actually receive (loan amount minus fees). It is found by iteration.
Worked example
A $10,000 loan at 6% for 5 years with $300 in fees: you receive $9,700 but repay $193.33 a month. The APR is about 7.3%, higher than the 6% quoted rate.
When to use the APR Calculator
- Comparing loan offers that have different fees and rates.
- Understanding the true yearly cost of a credit product.
- Checking a lender's advertised APR against your own calculation.
Common mistakes to avoid
- Comparing the interest rate of one loan with the APR of another.
- Ignoring that APR usually does not include compounding, so the effective cost can be slightly higher.
- Using APR to compare loans with very different terms without also looking at the total cost.
Tips
- Compare APR, not the headline rate, when choosing between lenders.
- APR assumes you keep the loan for the full term.
Frequently Asked Questions
Because APR includes fees and points that increase the real cost of borrowing.
Because APR includes fees and other charges spread over the life of the loan.
Usually, but also check the loan term and total repayment amount.