APR calculator

The annual percentage rate expresses the cost of credit as a yearly rate, including certain fees as well as interest. It answers the question: if all these costs were interest, what rate would you be paying?

Under Regulation Z, which implements the Truth in Lending Act, the APR is the rate that makes the present value of your payments equal to the amount you actually receive, the amount financed. Fees you pay to get the loan reduce what you receive while your payments stay the same, so the APR comes out higher than the note rate.

The calculator finds the monthly rate i that solves amount received = payment × (1 − (1 + i)^−n) / i, and multiplies it by 12. That's a nominal annual rate, the way US lenders disclose APR, not an effective annual yield.

A $200,000 loan at 6% for 30 years, with $4,000 in origination fees and points paid at closing:

1. Monthly payment on $200,000: $1,199.10.
2. Amount you effectively receive: 200,000 − 4,000 = $196,000.
3. The rate at which 360 payments of $1,199.10 are worth $196,000 today: 6.189% APR.

If the $4,000 is added to the loan instead, you borrow $204,000, pay $1,223.08 a month, and the APR is 6.186%: almost the same, because either way you pay interest on money you don't receive.

A $10,000 personal loan at 9% for 36 months with a $500 origination fee taken out of the loan:

• Monthly payment: $318.00.
• You receive $9,500.
• APR: about 12.54%.

On a short loan, the same fee has a much larger effect on the APR than on a 30-year mortgage, because it's spread over fewer payments. That's why comparing personal loans by APR rather than by interest rate is so important.

Regulation Z defines which charges are finance charges and so part of the APR. Broadly:

Usually included	Usually excluded (for mortgages)
Interest	Appraisal fee
Origination and underwriting fees	Credit report fee
Discount points	Title insurance and title fees
Mortgage insurance premiums	Recording fees and taxes
Some broker fees	Home inspection

The exact list depends on the type of loan, so the APR on your Loan Estimate is the official figure. This calculator includes exactly the fees you enter, which makes it useful for checking a lender's number or comparing two offers on equal terms.

• Same term, different fees: compare APRs directly. A loan with a lower rate but higher fees can have a higher APR.
• Keeping the loan for a short time: APR assumes you keep the loan for its full term. If you'll sell or refinance in a few years, upfront fees cost you more than the APR suggests, and a no-points loan may be cheaper even with a higher APR.
• Adjustable-rate loans: the APR is based on assumptions about future rates and is a weaker guide.
• Credit cards: the card's APR is simply its interest rate; fees such as annual fees aren't included.

APR is not the same as APY. APY (annual percentage yield) includes compounding and is used for savings accounts; a 6% nominal rate compounded monthly is a 6.17% APY.

It assumes a fixed rate, equal monthly payments over the full term and all fees paid at the start. It doesn't handle odd first periods, interest-only periods, balloon payments, or mortgage insurance that changes over time; a lender's APR calculation includes those details, so small differences from a disclosed APR are normal. Lenders' disclosed APRs are allowed a small tolerance under Regulation Z.

Your inputs are saved in the link, so the Share button sends the exact comparison. This is an estimate, not financial advice.