APR Calculator
Calculate Annual Percentage Rate (APR) including fees and compare loan costs
What is APR?
APR (Annual Percentage Rate) represents the true yearly cost of borrowing money, including both interest and fees.
Unlike the interest rate, APR includes origination fees, processing fees, and other loan costs.
APR provides a more accurate comparison tool when shopping for loans from different lenders.
APR Calculation
APR calculation involves finding the rate that makes the present value of payments equal to the loan amount minus fees.
The formula considers:
- Loan amount and term
- Interest rate and payment schedule
- All fees and closing costs
- Points and other charges
APR Comparison Tips
- Always compare APRs, not just interest rates
- Include all fees in your comparison
- Consider the loan term when comparing APRs
- Ask lenders for the APR in writing
- Remember that APR assumes you keep the loan for its full term
Example
A $10,000 loan at 8% interest with $500 in fees:
- Interest Rate: 8.00%
- APR: ~8.50% (includes fees)
- The APR is higher because it includes the cost of fees