Compute the true Annual Percentage Rate of any loan — including origination fees, discount points, and closing costs.
Adjust the sliders — APR updates live.
Annual Percentage Rate
Nominal Rate
6.50%
Total Fees
$2,500
Monthly Payment
$1,264
Total Cost
$457,589
| Year | Principal | Interest | Balance |
|---|
What is APR?
APR is the true yearly cost of borrowing — it folds in the nominal interest rate plus all mandatory fees, giving you a single comparable number.
On a $200,000, 30-year loan at 6.50%, just $2,500 in fees lifts the APR to about 6.62%.
APR Spread Guide
Excellent — under 0.125%
Very low fees relative to the loan.
Good — 0.125% to 0.25%
Typical range for competitive loans.
Moderate — 0.25% to 0.5%
Moderate fees — compare carefully.
High — above 0.5%
Significant upfront costs — negotiate.
The Formula
APR is derived using Newton–Raphson iteration to find the monthly discount rate at which the present value of all scheduled payments equals the net loan proceeds (loan amount minus upfront fees). That rate is then annualised — giving you the single number lenders must disclose under Regulation Z.
Formula
About This Tool
The Annual Percentage Rate (APR) is the standardised measure lenders are required to disclose under the Truth in Lending Act (TILA). Unlike the nominal interest rate, APR folds in origination charges, discount points, mortgage broker fees, and other mandatory costs — giving you a single number that makes loans truly comparable.
A $150,000, 30-year loan advertised at 6.25% with $4,000 in fees carries an APR of about 6.51%, making it more expensive than a 6.50% loan with minimal fees. This APR calculator handles the iterative math instantly so you can compare offers side-by-side before signing.
This tool uses the US actuarial method (the same method mandated under Regulation Z). Results are educational estimates; the binding APR is disclosed in your Loan Estimate document.
Live APR Math
Newton–Raphson solver runs in real time as you adjust any input.
Full Fee Breakdown
Origination, points, and other closing costs each get their own slider.
Rate vs APR Compare
Side-by-side bars show the spread between nominal rate and true APR.
100% Free & Private
No account needed. All calculations run locally in your browser.
Interactive Charts
See payment makeup and balance over time as APR shifts.
Compare Loan Terms
Toggle 10, 15, 20, or 30-year loans with one click.
Five simple inputs reveal the true cost of any loan offer in seconds.
The principal you plan to borrow, before any fees are applied. This is the gross loan size your lender is offering.
The stated rate from the lender's quote — not the APR. The calculator solves for APR using this as the starting point.
Select 10, 15, 20, or 30 years. Shorter terms amortise fees over fewer payments and tend to widen the rate-to-APR spread.
Origination fee, other closing costs, and discount points. These costs are what separate APR from the nominal rate.
A wide gap means high upfront costs. Use the Rate Compare tab to see the difference at a glance.
Step-by-step
APR is the interest rate that makes your scheduled payments equal the money you actually receive. That is the loan amount minus the upfront fees. Because fees shrink what you receive but not what you repay, APR is always at least as high as the note rate. U.S. lenders must disclose it under the Truth in Lending Act (Regulation Z).
The $300 fee adds about 2.07 percentage points to the cost of this short loan. On a 30-year mortgage the same fee barely moves the APR, because it is spread over many more payments. Compare loans of the same term by APR.
| Conversion | Formula | Example at 6% APR |
|---|---|---|
| APR → monthly periodic rate | APR ÷ 12 | 0.5% per month |
| APR → APY (monthly compounding) | (1 + APR/12)¹² − 1 | 6.168% |
| Monthly rate → APR | monthly rate × 12 | 0.5% × 12 = 6% |
Credit cards quote APR too. A 24% card APR is a 2% monthly periodic rate, and it compounds to an effective 26.82% a year if you carry a balance. To find the rate from a payment you already know, use the interest rate calculator. To see where every dollar goes, use the amortization calculator.
Everything you need to know about APR, loan fees, and how this calculator solves for the true annual rate.
APR (Annual Percentage Rate) is the true yearly cost of borrowing, including both the interest rate and all mandatory fees. Two loans with the same nominal rate but different fee structures will have different APRs — always compare APRs when shopping.
APR is found by solving for the monthly discount rate that equates the present value of all scheduled payments to the loan amount minus financed fees (net proceeds). This is done numerically using Newton–Raphson iteration, then annualised: APR = monthly rate × 12.
The interest rate determines your monthly payment on the principal. APR wraps in origination charges, points, broker fees, and other upfront costs. Lenders are legally required to disclose APR alongside the stated rate under Regulation Z.
A spread below 0.25% above the nominal rate is generally low. Anything over 0.5% suggests significant upfront costs. For short-term loans (under 5 years), even small fee amounts cause large APR spreads because fees are amortised over fewer payments.
Not necessarily. If you plan to sell or refinance within a few years, a lower rate with higher upfront fees (higher APR) may cost less than a higher rate with fewer fees. Calculate the break-even point: divide the fee difference by the monthly savings to find how many months to recoup the cost.
Results are estimates for education and planning. They are not financial, tax or legal advice. Rates, fees and tax rules change, so confirm the figures with your lender, the IRS or a qualified professional before you make a decision.
Spotted an error or out-of-date figure? Tell us. We review every report and correct confirmed mistakes promptly.