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APR Calculator
What is the true APR on this loan after fees?
Find the true cost of your loan including fees and closing costs.
Compare Loan Offers on a True-Cost Basis
APR converts fees plus interest into one comparable annual rate so you can avoid deceptively low headline rates.
Use this for
- Comparing mortgage lender quotes
- Evaluating points and origination fees
- Deciding between low-rate/high-fee vs high-rate/low-fee options
You will get
- Estimated effective APR
- Monthly payment and total interest
- Net proceeds after fees
Quick Result
Estimated effective APR
6.597%
Nominal rate: 6.5%
Based on
- • Loan amount: $250,000.00
- • Nominal interest rate: 6.5%
- • Term and fees: 30 years, $2,500.00 in fees
Loan Details
Origination, points, closing costs, etc.
Effective APR
6.597%
vs 6.5% nominal interest rate
Monthly Payment
$1,580.17
Net Proceeds
$247,500.00
Total Interest
$318,861.22
Fees
$2,500.00
This tool is for illustrative purposes only and does not constitute professional financial, tax, or legal advice. Calculations are estimates and may not reflect real-world variables or local regulations. Always consult with a qualified professional before making financial decisions.
Methodology and Trust
Formulas
Monthly payment
payment = P×r×(1+r)^n / ((1+r)^n - 1)
Net proceeds
netProceeds = principal - fees
APR solve target
netProceeds = payment × (1 - (1+r)^-n) / r
Annual APR
APR = monthlyRate × 12 × 100
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Understanding APR: The True Cost of Borrowing
Key Insights & Concepts
APR (Annual Percentage Rate) is a standardized measure created by the Truth in Lending Act (TILA) that represents the total annual cost of borrowing money. Unlike the basic interest rate, APR includes origination fees, discount points, mortgage insurance, closing costs, and other charges—giving you the most accurate picture of what a loan will actually cost.
APR vs. Interest Rate: What's the Difference?
The interest rate is the cost of borrowing the principal loan amount, expressed as a percentage. APR, however, is a broader measure that wraps in all mandatory fees. Here's why this matters:
Interest Rate Only
$300,000 loan at 6.5% = $1,896/month
Excludes all fees
True APR (6.75%)
Same payment, but includes $5,000 in fees
Real cost is higher
What Fees Are Included in APR?
- Origination Fees: Lender charges for processing the loan, typically 0.5-1% of the loan amount.
- Discount Points: Upfront payments to lower the interest rate. Each "point" is 1% of the loan amount.
- Mortgage Insurance Premiums: Required for loans with less than 20% down payment (FHA, PMI).
- Closing Costs: Title insurance, appraisal fees, attorney fees, and other settlement charges.
- Broker Fees: If you use a mortgage broker, their commission is factored in.
How to Use APR for Comparison Shopping
When comparing loan offers from different lenders, APR is your equalizer. A lender offering a lower interest rate but charging $8,000 in fees may have a higher APR than one with a slightly higher rate but only $2,000 in fees. Always compare APRs side-by-side when evaluating mortgage or auto loan offers.
Important: APR assumes you'll keep the loan for the full term. If you plan to refinance or sell within 5-7 years, a loan with higher fees and lower rate may cost more than one with lower fees and a slightly higher rate.
APR for Different Loan Types
- Mortgages: APR is federally mandated. Compare Loan Estimates from multiple lenders.
- Auto Loans: Dealership financing often hides fees in the rate—always calculate APR separately.
- Personal Loans: Online lenders must disclose APR. Beware of "0% introductory APR" offers that reset to high rates.
- Credit Cards: APR represents the annualized cost of carrying a balance. Avoid cards with APRs above 20% if possible.
Pro Tip: When negotiating with lenders, focus on both the interest rate AND the fees. A lender may refuse to lower the rate but might waive the origination fee—effectively lowering your APR.