APR Calculator
Calculate loan payments, interest rates, and payoff schedules for personal, auto, and business loans.
Loan Details
Principal loan amount
Annual interest rate
Length of loan
Additional Costs
Lender fees and charges
Discount points paid
Other closing costs
APR Results
Annual Percentage Rate (APR)
-1% vs interest rate
Interest Rate
Nominal rate
Effective Rate
Additional cost
Principal vs Interest
Payment Information
Cost Breakdown
APR vs Interest Rate
- • APR includes all loan costs, not just interest
- • Higher APR means higher total borrowing cost
- • Use APR to compare different loan offers
- • APR is required disclosure for most loans
How it works
APR (Annual Percentage Rate) expresses the true yearly cost of borrowing, including fees, as a single rate. When a loan has origination or other fees, the APR sits above the nominal interest rate — which is why it's the fair number for comparing offers.
APR vs nominal rate
APR ≈ the rate at which (financed amount − fees) equals the present value of all payments
- nominal rate
- the quoted interest rate
- fees
- origination and other up-front charges
Worked example
- Borrow $10,000 at 8% for 3 years
- Origination fee = $300 (you receive $9,700)
- Payments are set on the full $10,000 at 8%
- But you only got $9,700 — so the effective rate is higher
APR ≈ 10% — about two points above the 8% nominal rate once the fee is counted.
Good to know
- Always compare loans by APR, not the interest rate, when fees differ.
- APR assumes you keep the loan to term; paying off early makes a fee-heavy loan effectively more expensive.
- For credit cards, APR ÷ 12 (or ÷ 365 daily) is what actually accrues on a carried balance.
Related Calculators
Frequently Asked Questions
What is APR?
Annual Percentage Rate is the true yearly cost of borrowing expressed as a single rate, including not just interest but also origination and certain other fees. US lenders must disclose it under the Truth in Lending Act, which makes it the fair basis for comparing loan offers.
Why is my APR higher than my interest rate?
Because fees are folded in. If you borrow $10,000 at 8% but pay a $300 origination fee, you effectively received only $9,700 while paying on $10,000 — pushing the APR to roughly 10%. The bigger the fees relative to the loan, the wider the gap.
What is the difference between APR and APY?
APR ignores intra-year compounding; APY (annual percentage yield) includes it. Borrowing products quote APR, savings products quote APY — and for the same nominal rate, APY is always equal or higher. A 12% APR compounded monthly is about a 12.68% APY.
How should I use APR to compare loans?
Compare APRs on offers with the same term and type — the lower APR is the cheaper loan if held to maturity. One caveat: APR spreads up-front fees over the full term, so if you expect to pay off or refinance early, a low-fee loan can beat a lower-APR, high-fee one.
What is a good APR?
It depends on the product, your credit, and prevailing rates: secured loans like mortgages and auto loans carry far lower APRs than unsecured personal loans, and credit cards are typically the most expensive of all. Get several quotes the same week, since both market rates and your credit picture move over time.