APR Calculator
Calculate the Annual Percentage Rate (APR) on loans.
Compare the true cost of borrowing including fees and interest over the life of a loan.
APR (Annual Percentage Rate) is the true annual cost of borrowing money, expressed as a percentage. Unlike the nominal interest rate, APR includes both interest and fees, making it the legally required disclosure for comparing credit products in the United States under the Truth in Lending Act (TILA).
APR formula: APR = [(Interest + Fees) ÷ Principal ÷ Loan Term in Days] × 365 × 100
For compound interest loans (mortgages, car loans): APR is calculated by finding the interest rate r that satisfies: Loan Amount = Σ [Payment ÷ (1 + r/12)^n] for all n monthly payments
Then: APR = r × 12 × 100
Where the payment includes amortized fees built into the calculation.
Simple APR (for short-term loans and credit cards): APR = (Periodic Rate × Number of Periods per Year) × 100 For a credit card with 1.5% monthly rate: APR = 1.5% × 12 = 18% APR
What each variable means:
- Nominal rate vs. APR: nominal rate = stated interest only; APR = interest + origination fees + broker fees + mortgage insurance + other required fees
- APR vs. APY: APR is periodic rate × periods; APY (Annual Percentage Yield) accounts for compounding and is always higher than APR for the same loan
- Credit card APR: typically 15–30%; applies to balances not paid in full each month; pay in full every month and APR is irrelevant
- Payday loan APR: a $15 fee on a $100 two-week loan = 15% for 14 days = APR of (15÷100÷14)×365×100 = 391% APR, the legal reason APR disclosure is required
Reference: typical APR ranges by product (US 2024):
- 30-year fixed mortgage: 6.5–8.0%
- Auto loan (excellent credit): 4–7%
- Auto loan (fair credit): 8–15%
- Personal loan: 8–36%
- Credit card: 15–30%
- Payday loan: 300–700%
- Business credit card: 18–28%
Worked example: $200,000 mortgage, 7.0% interest rate, $3,500 in origination fees, 30-year term.
- Without fees: APR = 7.0%
- With $3,500 fees included: the effective loan amount starts at $200,000 but $3,500 is immediately taken out in fees, meaning you receive $196,500 but repay as if you borrowed $200,000
- Recalculating r that makes PV($196,500) = PV(all 360 payments at 7%): APR ≈ 7.19%
- The 0.19% difference adds $7,600 in effective total cost over 30 years
Always compare APRs — not interest rates — when shopping for any loan product.