APR Calculator

How to use this APR calculator

Enter the loan amount you'll actually borrow, the note interest rate the lender quotes, and the term in years. Then add up the upfront costs — origination fees, discount points, broker fees and other charges baked into the loan — and put the total in the fees & points box. The calculator instantly shows your true APR, the monthly payment, and how that APR compares to the headline note rate. Adjust any input to see how a fee discount or a slightly different rate changes the real cost.

How this is calculated

First we work out the monthly payment from the loan amount, note rate and term using the standard amortization formula. Then comes the key step: APR reflects the cost of the money you actually receive. Because fees and points come out of the loan up front, you get less cash than the face amount, yet you still repay as if you borrowed the full sum. We solve for the effective monthly rate that makes your real proceeds — loan amount minus fees — produce that same payment over the same term, then multiply by twelve to express it as an annual percentage rate. The bigger the fees relative to the loan, the further APR pulls above the note rate.

Educational estimate, not financial advice — see our disclaimer.

A worked example

Say you borrow $200,000 at a 6% note rate over 30 years, with $4,000 in fees and points. The monthly payment, set by the note rate, works out to about $1,199. But you only walk away with $196,000 in usable funds after the fees come out. Solving for the rate that ties that smaller amount to the same $1,199 payment gives an APR of roughly 6.18% — about 0.18 points above the note rate. On a larger fee, say $8,000, the gap widens further. That spread is exactly what lenders are required to disclose, because it lets you compare loans on an apples-to-apples basis.

Why APR beats the note rate for comparing loans

Two loans can advertise the same interest rate yet cost very different amounts once fees are counted. A "low rate" loan loaded with points may actually be pricier than a slightly higher-rate loan with no fees. APR folds those upfront costs into a single number, so a lower APR generally means a cheaper loan — assuming the term is the same. Use it as your first filter when shopping. When you're weighing an unsecured personal loan, our personal loan calculator can show the monthly payment and total interest side by side.

Common mistakes to avoid

• Comparing APRs across different terms — a 15-year and a 30-year loan with the same APR are not equally cheap in total dollars.
• Forgetting which fees count — origination, points and broker fees belong in APR; third-party costs like home insurance usually don't.
• Ignoring how long you'll keep the loan — APR assumes you hold to term, so heavy upfront fees hurt less if you plan to refinance or sell early.
• Treating APR as your monthly payment rate — your payment is still set by the note rate; APR is a cost-comparison yardstick, not the figure used to compute the bill.