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Loan APR Calculator

Calculate the true Annual Percentage Rate (APR) including fees.

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Inputs

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Results

Real APR
Nominal Monthly Payment$1,264.14

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Assumptions

  • Calculated locally from the inputs shown in this report.

Sensitivity preview

Loan Amount -10%: Real APR 6.66%

Loan Amount Current: Real APR 6.65%

Loan Amount +10%: Real APR 6.63%

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About this APR Calculator

When shopping for a mortgage or car loan, the advertised 'Interest Rate' isn't the whole story. Lenders charge fees (points, origination, closing costs) that increase your actual cost. The Annual Percentage Rate (APR) incorporates these fees into a single percentage for easier comparison.

How to use this calculator

  1. Enter the Loan Amount.
  2. Enter the Interest Rate quoted by the lender.
  3. Enter the Loan Term.
  4. Input the total Extra Fees (Closing costs, Origination fees, Mortgage Insurance points).

Accuracy and testing

Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.

View accuracy page

How this calculator works

The calculator first determines the monthly payment based on the nominal interest rate. Then, it subtracts the fees from the loan amount to find the 'Net Loan Proceeds'. Finally, it calculates the interest rate required to pay off the *original loan amount* using the *net proceeds* over the term.

Inputs explained

Interest Rate

The base cost of borrowing money, used to calculate your monthly payment.

Extra Fees

Upfront costs required to get the loan. For mortgages, this includes points, origination fees, and broker fees.

Understanding your results

If the APR is significantly higher than the Interest Rate, it means the loan has high upfront fees. Use APR to compare loans with different fee structures.

Example scenarios

High Fee Loan

$200k loan at 6.0% with $5,000 fees. Payment is $1,199. APR jumps to ~6.35%.

No Fee Loan

$200k loan at 6.25% with $0 fees. Payment is $1,231. APR is exactly 6.25%.

Key Features

  • True Cost Calculation
  • Fee Integration
  • Mortgage & Auto Support

Things to Keep in Mind

Assumes fees are paid upfront and deducted from loan proceeds or added to cash to close. Does not account for interest-only periods.

Tips & Best Practices

  • Always compare APRs, not just interest rates, when shopping for loans.
  • APR is most accurate for keeping a loan for its full term. If you refinance or sell early, the effective cost of upfront fees is much higher.

Glossary of Terms

Nominal Rate
The interest rate stated on the loan note.
Origination Fee
A fee charged by a lender for processing a new loan application.

Frequently Asked Questions

Why is APR higher than the interest rate?
Because APR includes the fees you pay to get the loan. It spreads those one-time costs over the life of the loan to show an annualized cost.
Can APR be lower than the interest rate?
Rarely. This can happen with 'negative points' (lender credits) where the lender pays your closing costs in exchange for a higher rate.