APR Calculator

APR is not simply your interest rate with fees added on top — it's a rate that, if applied to the amount you actually received (loan minus upfront fees), would produce the same payment stream you agreed to at your nominal rate. That's a subtle but important distinction, and it's why APR calculations require an iterative solver rather than simple arithmetic.

1. The lender calculates your monthly payment using the nominal interest rate and loan amount.
2. Upfront fees are subtracted to find the amount you actually receive in cash (the "amount financed" for APR purposes).
3. A solver searches for the discount rate at which that same payment stream, valued today, equals the net amount received.
4. That monthly discount rate is multiplied by 12 and expressed as a percentage — your APR.

On a fixed-rate loan, your nominal rate never changes, so the APR disclosed at closing remains accurate for the life of the loan. On an adjustable-rate loan (ARM), the rate — and therefore your payment — can reset periodically based on a market index plus a margin. The APR shown on an ARM disclosure is only a snapshot estimate assuming current index conditions hold for the full term, which they rarely do. If you're comparing ARM offers, treat the disclosed APR as directional rather than a guarantee, and ask your lender for the rate caps and adjustment schedule.

A note on credit cards

Credit card APR works differently from the installment-loan APR this calculator computes. Cards are revolving credit with no fixed term or amortization schedule, so card APR is generally just the interest rate applied to your average daily balance — fees like annual fees are usually disclosed separately rather than blended into APR.

When comparing a refinance offer to your current loan, run both the new loan's APR and your current loan's remaining effective cost through this calculator. A lower APR on the new loan doesn't automatically mean refinancing is worth it once you factor in closing costs, any prepayment penalty on the old loan, and how many months you plan to keep the new loan before selling or refinancing again. A common rule of thumb is to divide total refinance closing costs by your monthly payment savings to estimate your break-even point in months.

• Origination fee — a flat or percentage-based charge for processing and underwriting the loan.
• Discount points — optional upfront payments that buy down your nominal interest rate.
• Application fee — a smaller charge to process your initial application, sometimes non-refundable.
• Mortgage insurance premiums — required when a down payment falls below a lender's threshold, often included in mortgage APR.
• Underwriting and processing fees — administrative charges bundled into many loan types.
• Third-party fees — appraisal, title, and recording fees that may or may not be included in APR depending on loan type and jurisdiction.

• Comparing rate to APR directly. They measure different things — always compare APR to APR, and rate to rate.
• Ignoring the loan term. A lower APR over a much longer term can still cost more in total interest.
• Forgetting fees are negotiable. Origination fees and points are often negotiable; re-run the calculator after any lender counteroffer.
• Assuming ARM APR is permanent. Adjustable-rate APR is only an estimate at closing, based on current index conditions.
• Overlooking excluded fees. Some third-party costs sit outside APR entirely — ask for a full fee itemization, not just the disclosed APR.
• Choosing lowest APR without checking total cost. A shorter, higher-payment loan can have a lower APR yet a similar or higher total cost than a longer one — always check both.