APR Calculator

Calculate the true annual cost of a loan including fees to compare lender offers accurately.

Compound Interest

Annual Nominal Rate

8.4472%

Effective Annual Rate

8.4472%

Rate per Period

8.4472%

r = (FV/PV)^(1/5) − 1 = 8.4472% per period

APR Calculator Formula & How It Works

APR = IRR of cash flows × 12 × 100% (for monthly loans)
  • Cash flow at time 0 = Loan Amount − Fees
  • Cash flows 1 to n = −Monthly Payment
  • IRR = internal rate of return of the cash flow series
  • APR > stated rate because it includes lender fees

APR includes both the interest rate and upfront fees (origination fees, points, broker fees) rolled into an effective annual rate. Because of this, APR is always ≥ the stated interest rate. Use APR to compare loans with different fee structures.

APR Calculator FAQs

What is the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal only. APR includes both the interest rate and loan fees, giving a more complete picture of the annual cost of the loan.

Which is better, a lower interest rate or lower APR?

Compare APR when loan terms are the same length. If you plan to sell or refinance early, a low-rate loan with high fees (high APR) may cost less in the short term since you pay fees once but benefit from the lower rate.

Is a 7% APR on a mortgage good?

What's 'good' depends on current market rates, your credit score, and loan type. Check current average rates and compare multiple lenders' APR (not just rate) to assess competitiveness.

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