APR Calculator
Estimate APR by including upfront fees in the effective cost of borrowing. Useful for comparing loan offers beyond the nominal interest rate.
APR Calculator tool
Example: origination fee, processing fee, points (entered as a dollar amount).
Informational only. This APR is estimated from a simplified cash-flow approach.
APR helps you compare loans by incorporating certain fees into the borrowing cost. In this calculator, we first compute the monthly payment using the nominal interest rate. Then we estimate the effective rate that makes the present value of those payments equal to the net proceeds you actually receive.
Step 1 — Monthly payment (nominal):
M = P × (r(1+r)n) ÷ ((1+r)n − 1)
where P = loan amount, r = nominal monthly rate, n = number of payments.
Step 2 — APR estimate with fees:
Net proceeds = P − fees. We solve for the monthly rate i such that:
Net proceeds = M × (1 − (1+i)−n) ÷ i
Then convert to effective annual APR: (1+i)12 − 1.
Examples
- $10,000 at 8% for 3 years with $200 fees → APR higher than 8%
- Compare two loans: lower nominal rate may still have higher APR if fees are larger
FAQ
- What is APR (Annual Percentage Rate)?
APR is the effective annual cost of borrowing that includes interest plus certain fees. It helps compare loans more fairly than the nominal interest rate alone.
- Is this the same APR a lender shows?
This is a close estimate using a simplified cash-flow method. Real lender APR may include additional costs or different timing/rounding rules.
- How are fees treated in this calculator?
Upfront fees are treated as reducing the net amount you receive (loan amount minus fees). You still repay based on the full loan amount.
- What if fees are rolled into the loan balance?
If fees are financed (added to the balance), the true cost can differ. This calculator assumes fees are paid upfront (net proceeds are lower).
- Does APR include insurance, taxes, or penalties?
No. This tool focuses on principal, interest, and an upfront fee amount. Other charges can change the effective cost.