APR Calculator

APR calculator at a glance#

APR (Annual Percentage Rate) is the yearly cost of a loan expressed as a single rate, including the interest rate plus the lender fees and finance charges. Because it folds those fees into one number, APR shows the true cost of borrowing and lets you compare loan offers on equal terms.

APR vs interest rate#

The interest rate is the cost of borrowing the principal alone, written as a percentage. APR adds the lender fees and finance charges on top, so the APR is usually higher than the interest rate. Two loans can share the same interest rate yet have different APRs once their fees differ, which is why APR is the fairer figure for comparing offers.

APR vs APY#

APR is a simple yearly rate that does not account for compounding. APY (Annual Percentage Yield) does: it reflects interest charged on interest within the year, so for the same nominal rate the APY is a little higher. A 10% nominal rate compounded monthly works out to an APY of about 10.47%. APR is the standard way to quote loan cost; APY shows up when interest compounds.

Worked example: how fees raise the rate#

Take a $10,000 loan at a 6% nominal interest rate with $300 in fees. The fees equal 3% of the loan ($300 of $10,000). First-year interest is $10,000 times 0.06, which is $600, so your total first-year cost is $600 plus $300, or $900. Because you pay interest on the full $10,000 but effectively receive only $9,700 after the fees, that $900 is about 9.3% of the $9,700 you actually get. The fees push the effective APR above the 6% nominal rate, and the bigger the fees, the wider that gap.

Enter your loan amount, interest rate, term and fees in the calculator above for the exact APR. The precise figure depends on how fees are spread across the payment schedule, so APR is best used to compare offers rather than as a fixed number that fits every lender the same way.

What the APR rolls in#

APR converts the interest rate plus the loan's fees into one yearly rate, so two offers with the same headline interest rate can carry different APRs once their fees differ. The fees folded in usually include origination or processing charges, points on a mortgage, and other finance charges the lender requires. Costs you would pay anyway, like late fees or optional add-ons, are not part of the APR. Because APR captures the fees, it is the figure to compare across lenders rather than the interest rate alone.

What moves the rate you are offered#

Lenders price a loan mostly on credit and term. A higher credit score generally earns a lower rate, because it signals lower risk. A longer term often carries a higher rate and always means more total interest, since you owe a balance for longer. The loan amount and the type of loan matter too, and benchmark rates set by central banks shift what every lender offers. Run different rates and terms through the calculator above to see how each one changes the monthly payment and total cost.

Comparing offers the right way#

Line up offers on APR, not on the interest rate or the monthly payment. A lower monthly payment can hide a longer term and more total interest, and a low interest rate can come with high fees that push the APR up. Check the term and the total amount repaid alongside the APR so you are comparing the full cost, not one piece of it.

Frequently asked questions#

What is APR and what does it include?#

APR is the yearly cost of a loan as a single rate, combining the interest rate with the lender's required fees and finance charges. It gives a fuller picture of cost than the interest rate alone, which is why lenders must disclose it.

How does my credit score affect my APR?#

A higher credit score usually earns a lower rate and better terms, because it signals lower risk to the lender. A lower score tends to mean a higher rate and stricter terms, raising the APR.

How do monthly payments affect total interest?#

Higher payments clear the balance faster, so you pay less total interest. Lower payments stretch the loan out and raise the total interest, even at the same rate. The calculator above shows the total interest for any payment and term.

Is a fixed or variable rate better?#

A fixed rate keeps your payment the same for the whole term, which is predictable. A variable rate can start lower but moves with the market, so payments may rise. The right choice depends on how much rate certainty you want.

How does the central bank rate affect loan rates?#

Benchmark rates set by central banks are a reference point lenders price against. When the benchmark is low, loan rates tend to be lower; when it rises, loan rates usually follow.