APR Calculator

What is APR?

The annual percentage rate (APR) is the yearly cost of a loan including both interest and most fees. Because fees are counted, APR is usually higher than the interest rate, and it gives a fairer way to compare loan offers.

How APR is calculated

First the monthly payment is worked out from the interest rate. APR is then the rate that makes those same payments repay only the money you actually receive after fees:

Amount received = payment × (1 − (1 + APR ÷ 12)^−n) ÷ (APR ÷ 12)

There is no direct formula for APR, so the calculator solves the equation numerically.

Worked example

A $20,000 loan at 8% for 60 months has a payment of $405.53. If $800 of fees is deducted, you receive $19,200. The rate at which 60 payments of $405.53 repay $19,200 is an APR of about 9.74%.

APR vs interest rate

	Interest rate	APR
Includes interest	Yes	Yes
Includes lender fees and points	No	Yes
Best for	Working out the payment	Comparing loan offers

Lenders follow specific rules on which fees count toward APR, so the official APR on your loan disclosure may differ slightly from this estimate.

Frequently asked questions

Why is APR higher than the interest rate?

APR adds fees such as origination charges and points to the interest, spreading their cost over the loan term.

Is a lower APR always better?

Usually, for loans with the same term. If you will pay off the loan early, upfront fees weigh more heavily, so compare total costs too.

What is a good APR?

It depends on the loan type and your credit. Compare offers for the same loan type and term on the same day.

Does APR include compounding?

No. APR is a simple annual rate. APY or effective annual rate includes compounding and is slightly higher.