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APR Calculator
Calculate Annual Percentage Rate to compare the true cost of loans including fees and interest charges.
About This Calculator
APR (Annual Percentage Rate) is the true cost of borrowing that includes both the interest rate and all fees. Lenders are legally required to disclose APR in most countries. This calculator helps you compare loans accurately by computing the actual APR from loan terms and fees.
How to Use This Calculator
- 1Enter the loan amount
- 2Enter any upfront fees or origination charges
- 3Enter the stated interest rate
- 4Enter the loan term in years
- 5Click Calculate to see true APR and compare with stated rate
Formula Used
APR accounts for fees: solve for r in: Loan − Fees = Payment × [1−(1+r)^−n]/r
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FAQ
Frequently Asked Questions
Common questions about the apr calculator answered.
What is the difference between APR and interest rate?+
The interest rate is simply the cost of borrowing the principal. APR includes the interest rate plus all mandatory fees such as origination fees, broker fees, and mortgage points. APR gives a more accurate picture of the true cost of a loan, which is why comparing APR across lenders is more meaningful than comparing stated rates.
Why is APR important when comparing loans?+
Two loans with the same interest rate can have very different APRs if one has higher fees. For example, a $200,000 mortgage at 6.5% with $4,000 in fees might have an APR of 6.73%, while a 6.75% loan with no fees has an APR of 6.75%. The first loan is actually cheaper over the full term despite the higher fees.
Is a lower APR always better?+
Generally yes, but consider the loan term. A loan with high fees but a lower APR may cost more if you pay it off early, since you paid fees upfront. For short-term loans or if you plan to refinance soon, a higher rate with fewer fees may be more cost-effective. Always calculate total cost for your expected holding period.
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