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APR Calculator

Convert between nominal interest rate and APR, factor in loan fees, and compare two loan offers side by side. Free, no sign-up required.

APR Results

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APY (Effective) �?/span>
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How APR Works

APR (Annual Percentage Rate) is the standardized way to express the true yearly cost of a loan. Unlike the nominal interest rate, APR includes origination fees, points, mortgage insurance, and other upfront costs, giving you a single number to compare across lenders.

By law (Truth in Lending Act / Regulation Z), U.S. lenders must disclose APR on all consumer loans. This makes it the most reliable comparison metric when shopping for mortgages, auto loans, or personal loans.

APR Formula Explained

The precise APR is the discount rate that makes the present value of all loan payments equal to the net loan proceeds (loan amount minus fees):

Loan �?Fees = Σ [Payment / (1 + APR/12)^t] for t = 1 to n

This calculator solves for APR using Newton's method (iterative approximation). For simple estimates, a close approximation is:

APR �?(Total Interest + Fees) / Principal / (Term/12) × 100

Example APR Calculations

LoanRateFeesTermAPR
$20,000 personal6.0%$50060 mo~6.9%
$300,000 mortgage6.5%$3,000360 mo~6.72%
$30,000 auto7.5%$060 mo7.5%
$10,000 personal12.0%$40036 mo~14.8%

APR vs. APY: Key Differences

  • APR �?Used for loans. Represents the annual cost of borrowing including fees. Does not account for compounding within the year.
  • APY �?Used for savings/investments. Accounts for compounding. Always �?APR for the same nominal rate.
  • Rule of thumb: When borrowing, look for the lowest APR. When saving, look for the highest APY.

APR Calculator �?Frequently Asked Questions

What is APR and how is it different from interest rate?

The interest rate is the base borrowing cost. APR includes the interest rate plus lender fees (origination, points, mortgage insurance), making it a more complete measure of the true annual cost. APR is always �?the interest rate.

How is APR calculated?

APR is the discount rate that equates the present value of all payments to the net loan proceeds (loan minus fees). This calculator uses iterative approximation (Newton's method) to solve for the exact APR.

What is a good APR for a personal loan in 2025?

Excellent credit (750+): 6%�?2%. Good credit (700�?49): 12%�?8%. Fair credit (650�?99): 18%�?8%. Credit cards average 20%�?8%. Always compare APRs across at least three lenders.

What is the difference between APR and APY?

APR is for loans (cost of borrowing). APY is for savings (return on deposits) and accounts for compounding. APY is always higher than APR for the same nominal rate.

Should I compare loans by interest rate or APR?

Always compare by APR. Two loans with the same interest rate can have very different APRs if one has higher fees. APR is the single best apples-to-apples comparison metric.

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Educational purposes only. Not financial advice. APR calculations are estimates. Consult your lender for exact figures.