Finance
Calculate the true annual percentage rate on your loan, accounting for fees and points that reduce the amount you actually receive.
Annual Percentage Rate
0.00%APR
The true annual percentage rate accounting for fees and points that reduce the net amount you receive.
APR (Annual Percentage Rate) is the true cost of borrowing expressed as an annual rate. Unlike the nominal or stated interest rate, APR includes all fees, points, and closing costs bundled with your loan. When a lender quotes a 6% mortgage with 1 point ($2,000 on a $200,000 loan), your APR is higher than 6% because you're paying $2,000 upfront but still repaying the full principal. An APR calculator solves for the rate that makes your monthly payment's present value equal the net amount you actually receive after fees.
The calculator takes your loan amount, nominal interest rate, term, and total fees as inputs. It first computes the fixed monthly payment using the nominal rate. Then it solves for the discount rate that equates the present value of all your monthly payments to the actual amount of cash you receive (loan amount minus fees). This discount rate, when annualized, is your APR. If fees are high or the loan term is short, APR rises noticeably above the nominal rate.
APR is the rate r where: Amount Received = Monthly Payment × [(1 − (1 + r)^(−n)) / r]; where Amount Received = Loan Amount − Fees; Monthly Payment = computed at nominal rate; n = number of monthsThe equation solves for the monthly rate r that discounts all future monthly payments back to the net cash you received. Because fees reduce the principal you get upfront, the discount rate (APR) must be higher than the nominal rate to account for this immediate cost.
| Input | Result | Notes |
|---|---|---|
| Loan: $200,000 | Nominal Rate: 6% | Term: 360 months | Fees: $4,000 | APR: 6.24% | Monthly Payment: $1,199 | Total Cost: $435,964 | Typical mortgage: $4,000 in fees (2% origination, appraisal, insurance) raises APR from 6% to 6.24%—a subtle but real difference on a 30-year loan. |
| Loan: $35,000 | Nominal Rate: 8.5% | Term: 84 months | Fees: $1,200 | APR: 9.10% | Monthly Payment: $528 | Total Cost: $45,752 | Auto loan with dealer fees: $1,200 in closing costs over a shorter term pushes APR 0.6% higher than nominal—a bigger relative increase than the mortgage. |
| Loan: $15,000 | Nominal Rate: 12% | Term: 60 months | Fees: $600 | APR: 12.37% | Monthly Payment: $333 | Total Cost: $20,380 | Personal loan with origination fee: even small fees sting on shorter terms because they're amortized over fewer months. |
The interest rate (or 'nominal rate') is the annual percentage you pay on the principal balance. APR includes that rate plus all upfront fees, points, and closing costs spread across the loan term, expressed as an effective annual percentage. On a $200,000 mortgage with a 6% rate and $4,000 in fees, the APR might be 6.24%.
Many fees are standard and mandatory—appraisals, credit checks, and title services are essential and often charged by third parties. Some fees are lender-imposed and negotiable: origination fees, discount points, and broker fees. Always ask your lender which fees are fixed and which are negotiable.
This is unusual but can happen if you receive credits or rebates. For example, if the lender offers a $2,000 rate-reduction credit (negative fees), your APR would be lower than nominal. More commonly, APR is higher. Check that you've entered all fees—nothing should be missing.
Lenders typically lock your rate (and sometimes APR) for 30–60 days during the application. After closing, your APR is fixed for the life of the loan (if it's a fixed-rate loan). Always confirm the APR in your Closing Disclosure document—federal law requires lenders to disclose it.
No—credit cards and credit lines usually have variable rates and no fixed term, so APR is calculated differently. This calculator is for installment loans: mortgages, auto loans, personal loans, student loans, and any loan with a fixed rate and fixed monthly payment.
All lenders are required by law (in the US, under TILA-RESPA) to disclose APR on your Loan Estimate and Closing Disclosure. Collect the APRs from each lender's official documents, then use this calculator to verify the math if you suspect an error.