APR Calculator
True annual percentage rate including all fees and points for fair lender comparison
The real cost of a loan, not just the rate
A lower rate with high fees may cost more than a higher rate with low fees. APR is the only fair way to compare.
True APR calculation
Calculates the actual APR by solving for the rate that accounts for all fees in the payment stream.
Lender comparison
Run different offers side by side — the one with the lowest APR is the cheapest loan overall.
Fee impact visibility
See exactly how much fees raise the effective cost above the stated interest rate.
Rate vs APR gap
Shows the spread between the stated rate and the true APR so you can see what fees are costing you.
Mortgages and loans
Works for mortgages, personal loans, auto loans — any fixed-rate loan with upfront fees.
100% private
All calculations run in your browser. Your loan details stay on your device.
When to use it
Comparing lenders
Got multiple loan offers? APR is the single fairest basis for comparison.
Points decision
Decide whether paying points upfront to buy a lower rate is worth it.
Loan Estimate review
Cross-check the APR on your Loan Estimate against your own calculation.
Financial literacy
Understand why the stated rate is never the whole story on loan cost.
Frequently Asked Questions
What is APR and how is it different from the interest rate?
The interest rate is the cost of borrowing the principal alone, expressed as a percentage. APR (annual percentage rate) includes the interest rate plus most fees — origination fees, points, broker fees, and certain closing costs — expressed as a single annual percentage. APR is always equal to or higher than the stated interest rate and gives a more complete picture of the loan's true cost.
Why does APR matter when comparing loans?
Two loans with the same interest rate can have very different APRs if one charges higher fees. Comparing APRs instead of rates puts both loans on equal footing. Lenders are legally required to disclose APR under the Truth in Lending Act, precisely so borrowers can make these comparisons. Always compare APRs, not rates, when shopping between lenders.
Are all fees included in APR?
Not all fees are required to be in APR by law. Typically included: origination fees, discount points, mortgage broker fees, and prepaid interest. Typically excluded: appraisal, title insurance, inspection fees, and escrow deposits. This means two lenders with identical APRs may have different total closing costs — read the Loan Estimate carefully for the full picture.
Should I choose a lower rate or lower APR?
If you plan to keep the loan for its full term, lower APR generally means lower total cost. If you plan to sell or refinance early, lower rate with higher upfront fees might cost more overall — you pay the fees but don't keep the loan long enough to benefit. A lower rate with points (which are paid upfront to buy a lower rate) takes time to break even.
What is the APR on a credit card?
Credit card APR is the annual rate charged on balances you carry. Unlike a loan APR, it does not typically include fees in the calculation. Card APRs are usually variable, tied to the prime rate plus a margin. The stated APR on a card is the actual interest rate — there is rarely a gap between rate and APR the way there is on a mortgage.
Understanding APR
Annual percentage rate was created as a consumer protection measure — a standardized way to compare the true cost of loans from different lenders who might otherwise obscure fees in fine print. By law in the US (Truth in Lending Act), lenders must disclose APR alongside the interest rate, giving borrowers a common measure to compare.
How APR is calculated
APR works by solving for the interest rate that would make the present value of all loan payments equal to the net loan amount after fees are deducted. For example: you borrow $200,000 at 6.5% with $4,000 in fees, so you effectively receive $196,000 but make payments calculated on $200,000. The rate that prices those payments against $196,000 — not $200,000 — is the APR. It is always higher than the stated rate when fees are present, and the difference grows with higher fees or shorter terms.
When APR comparison breaks down
APR comparison assumes you hold the loan to maturity — the fees are spread over the entire term. If you sell your home or refinance after 5 years on a 30-year mortgage, you pay the full fees but only get 5 years of the rate benefit. This makes APR misleading for short holding periods: a high-fee low-rate loan looks great on a 30-year APR basis but is expensive if you hold it for only 5 years. Always combine APR analysis with a break-even calculation based on your expected holding period.