APR Calculator
Calculate the true cost of loans including fees and other charges with the Annual Percentage Rate
| Metric | With APR | With Interest Rate Only |
|---|---|---|
| Monthly Payment | $0.00 | $0.00 |
| Total Interest | $0.00 | $0.00 |
| Total Fees | $0.00 | $0.00 |
| Total Cost | $0.00 | $0.00 |
Understanding APR
APR (Annual Percentage Rate) is the true cost of borrowing money, including both the interest rate and any additional fees charged by the lender.
Key Differences:
- Interest Rate: Just the cost of borrowing the principal amount
- APR: Includes interest plus fees, giving the total cost
Why APR Matters:
- Allows you to compare loans with different fee structures
- Shows the true cost of credit
- Required by law to be disclosed by lenders
Tip: Always compare APRs when shopping for loans, not just interest rates.
An APR (Annual Percentage Rate) Calculator helps borrowers understand the true cost of a loan by factoring in interest rates plus additional fees. Unlike the nominal interest rate, APR provides a more comprehensive view of borrowing costs.
1. What is APR?
Definition: APR represents the yearly cost of borrowing, including interest + fees.
Key Difference from Interest Rate:
Interest Rate = Cost of borrowing principal only.
APR = Interest + fees (origination, closing costs, etc.).
Regulated by Truth in Lending Act (TILA) in the U.S.
2. APR Calculator Features
A. Input Fields
Loan Amount (Principal)
Nominal Interest Rate (Stated rate)
Loan Term (e.g., 30 years, 15 years)
Additional Fees (e.g., origination, points, closing costs)
B. Outputs
Total APR (%) – The effective annual rate including fees.
Total Cost of Loan – Principal + interest + fees.
Comparison Tool – APR vs. nominal interest rate.
C. Amortization Breakdown (Optional)
Monthly payment details.
How much goes to interest vs. principal.
3. How APR is Calculated
The formula for APR is complex (often requiring iterative methods), but the general concept is:
Simplified Example:
Loan Amount: $200,000
Interest Rate: 4%
Term: 30 years
Fees: $5,000
Step 1: Calculate total interest over 30 years (~$143,739).
Step 2: Add fees ($5,000) → Total Cost = $148,739.
Step 3: Compute APR ≈ 4.23% (higher than nominal rate due to fees).
(Note: Exact APR requires a financial calculator or Excel’s RATE function.)
4. Why APR Matters
✔ Compare Loans Fairly – A loan with lower interest but high fees may have a higher APR.
✔ Avoid Hidden Costs – Reveals the true cost beyond just the interest rate.
✔ Regulatory Compliance – Lenders must disclose APR by law.
5. Limitations of APR
Does Not Include:
Penalty fees (late payments, prepayment).
Variable-rate adjustments (for ARMs).
Assumes: Loan is held to full term (early payoff changes effective cost).
6. APR vs. APY (Annual Percentage Yield)
| APR | APY |
|---|---|
| Cost of borrowing (includes fees) | Total earnings (includes compounding) |
| Used for loans/mortgages | Used for savings/investments |
7. How to Use an APR Calculator
Enter Loan Details (amount, interest rate, term).
Input All Fees (origination, processing, etc.).
Calculate APR – Compare with other loan offers.
Example:
| Loan Offer | Interest Rate | Fees | APR |
|---|---|---|---|
| Bank A | 3.5% | $2,000 | 3.65% |
| Bank B | 3.25% | $6,000 | 3.8% |
→ Bank A is cheaper despite a higher nominal rate.
8. APR for Different Loan Types
Mortgages: Includes origination, appraisal, title fees.
Credit Cards: Combines interest + annual fees.
Auto Loans: Adds dealer fees, documentation costs.