APR Calculator
Calculate the true annual cost of a loan including all fees.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
The Annual Percentage Rate is a standardized measure of the true cost of borrowing that captures both the interest rate and the fees charged to originate a loan, expressed as a single yearly percentage. Lenders are legally required under the US Truth in Lending Act to disclose the APR alongside the stated interest rate, because interest rate alone can mislead when upfront costs vary widely between lenders. A loan with a 5% interest rate but $2,000 in fees may be more expensive than a 5.5% loan with no fees, especially over a short term — and an APR calculator makes that comparison possible. This APR calculator estimates the APR by computing the effective yield on the loan's cash flows, including fees. Because fees are deducted from the proceeds on day one but repaid over the life of the loan, they inflate the effective borrowing rate beyond the stated interest rate. The gap between APR and interest rate is largest on short-term loans with high fees and smallest on long-term loans with minimal fees. When comparing offers, always use APR rather than the stated rate, and ask each lender to confirm which fees are included in their disclosed APR, since some closing costs may be excluded. The APR is the only standardized, legally-required number that allows true cross-lender comparison.
APR ≈ ((fees + total interest) / principal) / years × 100
The APR is estimated by computing total fees and interest, dividing by the loan principal and term in years to get an annual rate. For the monthly payment, the standard amortization formula applies: P × r ÷ (1 − (1+r)^−n) where r is the monthly interest rate and n is the term in months. Total cost adds fees to all payments. An exact IRR-based APR iterates to find the discount rate equating net proceeds to present value of payments.
Source:Consumer Financial Protection Bureau (CFPB)
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter loan amount, stated interest rate and loan term.
- 2
Adjust the options
Adjust origination fee and other fees if they apply — sensible defaults are already set.
- 3
Read your result
APR updates instantly as you type — no button to press.
Frequently asked questions
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal expressed as a yearly percentage and does not include lender fees. APR adds those fees — origination charges, points, closing costs and certain other charges — to give the true all-in annual cost. Regulations require lenders to disclose APR so borrowers can make apples-to-apples comparisons. On a mortgage, APR is often 0.1–0.5 percentage points higher than the rate; on personal loans with high origination fees, the gap can be much larger.
Why is APR always higher than the stated interest rate?
Because APR incorporates upfront fees that are effectively prepaid interest. When you pay an origination fee, you receive less net cash but repay the full loan amount — so the effective cost per dollar borrowed is higher than the stated rate suggests. The only exception is if a lender offers loan discounts or credits that offset fees, which can theoretically make the APR equal to or lower than the rate. In practice, APR equals the rate only on no-fee loans.
What is a good APR for a personal loan?
Personal loan APRs range from around 6% for well-qualified borrowers to over 36% for subprime borrowers. As a rough benchmark: under 10% is excellent, 10–15% is good, 15–20% is average for mid-tier credit, and above 20% is expensive. Credit cards average around 20–24% APR. The best APR you can qualify for depends on your credit score, income, and debt-to-income ratio. Comparing at least three lenders via prequalification — which uses a soft credit pull — is the most reliable way to find your true market rate.
How do I compare loans using APR?
Collect APR figures from multiple lenders for the same loan amount and term, making sure each lender's disclosed APR includes the same categories of fees. A lower APR means lower total cost of borrowing, all else equal. However, also consider prepayment penalties, which can trap you in a high-rate loan, and whether the APR assumes a variable rate that could rise. For very short-term loans, even small fee differences matter more because the amortization period is brief and fees consume a larger share of total payments.
Does APR include all loan costs?
Not necessarily. US law requires APR to include interest, origination fees, points and certain other charges, but it typically excludes optional fees (credit insurance), third-party costs paid to non-lender parties (title insurance, appraisals), and late fees or prepayment penalties. This is why mortgages have multiple APR figures — the regulatory APR and sometimes an all-in APR — and why reading the full loan disclosure carefully is essential even after comparing APRs across lenders.