APR Calculator
Calculate the true annual percentage rate (APR) of a loan, including origination fees and other upfront charges
Last updated: 2026-07-18
The interest rate on a loan only tells part of the story -- lenders also charge origination fees, points, and other upfront finance charges that add to the real cost of borrowing. The Annual Percentage Rate (APR) folds those fees in with the interest rate to give a single, comparable annualized cost figure, which is why federal law (Truth in Lending Act / Regulation Z) requires lenders to disclose it. This calculator computes the true APR of a loan from its stated interest rate, term, and upfront fees, so you can compare loan offers on an apples-to-apples basis.
APR Calculation (Actuarial Method)
Numerical (bisection solve)PV = present value of payments · M = monthly payment · i = monthly APR rate (solved for) · n = number of payments · P = loan amount · F = fees
The monthly payment M is first computed from the loan's stated note rate on the full loan amount, the same as any standard installment loan. The APR is then the periodic rate i that makes the present value of that payment stream equal to the amount actually financed (the loan amount minus fees), solved numerically since there's no closed-form algebraic solution for i. The nominal annual APR is i × 12, following the actuarial method set out in Regulation Z Appendix J. Because fees reduce the amount you actually receive while your payments stay based on the full loan amount, the APR is always at or above the note rate whenever fees are charged.
Use Cases
Comparing Loan Offers
Two loans with the same interest rate can have very different APRs once fees are factored in.
Understanding Origination Fees
See exactly how much an upfront fee raises the effective cost of a loan.
Mortgage Points Analysis
Check whether paying points for a lower rate actually lowers your APR.
Truth-in-Lending Disclosure Check
Verify the APR disclosed on a loan estimate against an independent calculation.
Frequently Asked Questions
Why is APR higher than the interest rate?
APR includes upfront fees and finance charges in addition to interest, so whenever a loan has fees, its APR will be higher than the stated (note) interest rate.
Can APR ever equal the interest rate?
Yes -- if a loan has no origination fees or other financed charges, the APR equals the note rate exactly.
Is APR the best way to compare loans?
APR is a useful standardized comparison for loans with the same term, but it assumes you keep the loan for its full term -- if you plan to pay it off early, a loan with a lower APR but higher fees can end up costing more.
Does APR include compounding, like APY does for savings?
No -- APR is a nominal annual rate (the periodic rate multiplied by the number of periods per year), not compounded. This calculator uses the same nominal-APR method required for consumer loan disclosures under Regulation Z.
What counts as a fee in this calculation?
Any upfront finance charge that reduces the amount you actually receive but doesn't reduce what you owe -- origination fees, discount points, and similar prepaid finance charges. Fees you pay separately out of pocket (like a home appraisal paid directly) aren't part of the amount financed and shouldn't be included here.
References
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