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APR Calculator

Use this APR calculator to find the true annual percentage rate of a loan after accounting for fees and closing costs. Compare the stated interest rate to the effective APR to understand the real cost of borrowing.

The total amount you are borrowing before any fees are deducted.

The annual interest rate quoted by the lender, not including fees.

The length of the loan in years.

The total of all upfront fees including origination fees, closing costs, discount points, and any other charges folded into the loan cost.

The interest rate on a loan does not tell the whole story. Origination fees, closing costs, and other charges increase the true cost of borrowing. This calculator computes the effective APR, which reflects both the interest rate and the fees, so you can compare loan offers on an equal basis and understand what you are really paying.

How It Works

APR Approximation Formula

Effective Loan = Loan Amount - Fees; APR is the rate that makes PMT(APR/12, Months, Effective Loan) = PMT(Rate/12, Months, Loan Amount)

The APR is the interest rate that would produce the same monthly payment on the net loan amount (loan minus fees) as the stated rate produces on the full loan amount. This reflects the true cost since you receive less money but make the same payments.

The monthly payment is calculated using the standard amortization formula based on the loan amount and stated interest rate.

Fees reduce the amount of money you actually receive, so the effective loan amount is the original loan minus fees.

The APR is the interest rate that would give the same monthly payment when applied to the reduced effective loan amount.

A larger gap between APR and the stated rate means fees have a bigger impact on your true borrowing cost.

For shorter loan terms, the same dollar amount of fees has a larger impact on APR because the fees are spread over fewer payments.

Important Notes:

  • •This calculator uses an approximation method for APR. The true APR as defined by the Truth in Lending Act may differ slightly due to rounding and specific fee inclusion rules.
  • •The calculation assumes all fees are paid upfront at closing and are not financed into the loan balance.
  • •Only fees directly related to the loan are included. Third-party costs like appraisals, inspections, and title insurance may or may not be included in the official APR depending on regulations.
  • •This calculator assumes a fixed interest rate for the entire loan term.

Worked Example

A borrower takes a $250,000 mortgage at 6.5% interest for 30 years with $5,000 in closing fees.

Inputs:

  • loan Amount:250,000
  • interest Rate:6.5
  • loan Term Years:30
  • fees:5,000

Result:

The monthly payment at the stated 6.5% rate is approximately $1,580.17. After accounting for $5,000 in fees, the effective APR is approximately 6.637%, which is about 0.137 percentage points higher than the stated rate. Over 30 years, the total interest is about $318,861 and the total cost including fees is about $573,861.

Who Is This Calculator For?

  • mortgage borrowers
  • personal loan applicants
  • anyone comparing loan offers
  • homebuyers evaluating closing costs

Frequently Asked Questions

The interest rate is the annual cost of borrowing the principal amount. The APR includes the interest rate plus additional costs like origination fees, closing costs, and discount points, expressed as a single annual percentage. The APR is always equal to or higher than the interest rate.
Two loans with the same interest rate can have very different total costs if one has higher fees. The APR standardizes these costs into a single number so you can make an apples-to-apples comparison between lenders and loan products.
Under the Truth in Lending Act, APR typically includes origination fees, discount points, mortgage broker fees, and certain closing costs. It generally does not include appraisal fees, title insurance, or other third-party costs, though rules can vary.
Not necessarily. If you plan to sell or refinance within a few years, a loan with a higher rate but lower upfront fees may cost less overall. APR assumes you keep the loan for the full term. For shorter holding periods, compare total costs over your expected time frame.
Discount points are upfront fees paid to lower the interest rate, typically costing 1% of the loan amount per point. Paying points lowers the interest rate but increases the APR relative to the new lower rate because the upfront cost is factored in. Points are worthwhile if you keep the loan long enough to break even on the upfront cost.
For adjustable-rate mortgages, the APR calculation is more complex because it must estimate future rate changes. The APR for an ARM is based on the initial rate, adjustment caps, and an assumed rate path, which makes it less directly comparable to a fixed-rate APR.

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Last updated: April 11, 2026