APR Calculator

APR is the number lenders are legally required to show you precisely so you can skip the math this calculator just did for you. It takes a nominal rate, folds in how often it compounds, adds in upfront fees spread over the loan's life, and hands back one annual percentage you can put side by side with any other offer.

A Worked Example, Using the Formula Above

Suppose you're financing $15,000 at a 6% nominal rate, compounded monthly, with $350 in origination fees over a 4-year term. Here's exactly what the calculator does with those numbers:

• Effective rate: EAR = (1 + 0.06/12)¹² − 1 ≈ 6.168%
• Fee component: (350 ÷ 15,000) ÷ 4 = 0.583%
• APR = 6.168% + 0.583% ≈ 6.75%

Notice the nominal rate you were quoted was 6%, but the number that actually determines your total cost is 6.75%. That three-quarter-point gap is entirely fee and compounding — money a "6% loan" pitch would never mention.

APR vs. Effective Annual Rate: Not the Same Number

It's easy to conflate APR with EAR because APR is built on top of it, but they answer different questions. EAR isolates the pure cost of compounding — what a rate "really" becomes once interest starts earning interest on itself, with no fees involved. APR takes that EAR and adds the amortized cost of upfront charges, which is why APR is almost always the higher of the two once fees exist. If you want to isolate compounding effects on their own — say, to compare a savings account's quoted rate against its real yield — the Effective Interest Rate Calculator is the right tool; use this APR calculator when fees are part of the picture, such as a loan with an origination charge.

APR vs. Your Actual Amortization Schedule

APR is a single summary number; it can't tell you what your balance looks like in month 18 or how much of next month's payment goes to interest versus principal. For that month-by-month view, run the same loan amount, rate, and term through the Loan Amortization Calculator. Use APR to shop and compare offers; use the amortization schedule once you've picked one, to plan around it.

Where This Calculator's APR Can Diverge From a Lender's Disclosure

• This tool assumes the fee is paid upfront and amortized evenly across the full term — some lenders instead compute APR using a full cash-flow (IRR-style) method, which can produce a slightly different figure for the same fee.
• Variable-rate products (most credit cards) recalculate APR as the index rate moves, so the figure you see here is only accurate for a fixed-rate scenario.
• Prepayment penalties, late fees, and annual card fees are not baked into the disclosed APR by regulation, so this calculator doesn't include them either.

Further reading: CFPB — Know Before You Owe and Investopedia — APR.