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APR calculator

Estimate borrowing cost after entered fees.

  • Formula and assumptions shown
  • Table and CSV export
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Inputs

Results update as you type. Amounts in USD. Rates are your own assumptions.

Result

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Assumptions used

Calculated result—

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Notes and methodology

How it works

The model calculates a fixed monthly payment from the loan amount before fees, stated rate, and term. It then treats upfront fees as reducing net proceeds, solves for the monthly rate that matches the payment stream, and multiplies that rate by 12.

Formula

Monthly payment = amortizing payment(loan amount, stated annual rate ÷ 12, term months); estimated APR = 12 × IRR(−(loan amount − upfront fees), monthly payments).

This is an illustrative calculation. A lender's disclosed APR can follow legal definitions, rounding, payment timing, and fee-inclusion rules that differ from this simplified model.

Read the full methodology

Assumptions

  • The stated annual rate is divided by 12 and payments are monthly and level.
  • Upfront fees are paid at origination and reduce net proceeds; the scheduled payment is based on the loan amount before fees. This entered loan amount is not the Truth in Lending "amount financed", which already excludes prepaid finance charges.
  • The result annualizes the solved monthly rate by multiplying by 12; it is an estimate, not a regulated disclosure.
  • Taxes, insurance, late fees, and jurisdiction-specific fee inclusion and rounding rules are excluded.

Worked example

$10,000 for three years with a $300 fee

At a 6% stated rate, the monthly payment is about $304.22 and net proceeds are $9,700. Solving the monthly cash flows and multiplying by 12 gives an estimated APR of about 8.06%.

Step by step

  1. Compute the payment on the full amount. The monthly rate is 6% ÷ 12 = 0.5% over 36 payments: $10,000 × 0.005 ÷ (1 − 1.005^−36) = $304.22 a month.
  2. Subtract the fee from the proceeds. $10,000 − $300 = $9,700 of net proceeds: the cash actually received.
  3. Solve for the monthly rate. Find the monthly rate at which 36 payments of $304.22 are worth exactly $9,700 today. Trial and error (the model uses bisection) gives 0.6714% a month.
  4. Annualize the rate. 0.6714% × 12 = 8.06%, the estimated APR, 2.06 points above the 6% stated rate.
  5. Check the finance charge. The payments total 36 × $304.22 = $10,951.90. Against $9,700 received, the cost of borrowing is $1,251.90: $951.90 of interest plus the $300 fee.

How to read your result

The headline is the estimated APR: the annual rate that treats the upfront fee as part of the cost of borrowing. The secondary figures repeat the stated rate, the fee, and the monthly payment, and the table shows net proceeds, payment, and APR together. When the fee is zero, the APR equals the stated rate.

APR is annualized by multiplying the monthly rate by 12, the convention used in US Truth in Lending disclosures. It is not compounded; the equivalent effective annual rate in the example would be about 8.36%. APR also assumes the loan runs to its final payment. If the loan is repaid early, the fee is spread over fewer months and the true annual cost is higher than the APR shown.

A lender’s disclosed APR follows the Truth in Lending Act and Regulation Z, which define which charges count as finance charges, how payment dates are treated, and how much rounding is tolerated. Charges such as late fees are excluded, and some closing costs on mortgages are too. This page includes only the fee you enter.

What changes the result most

Fee size
On $10,000 at 6% for 3 years, a $0 fee gives an APR of 6.00%, $150 gives 7.02%, $300 gives 8.06%, and $600 gives 10.21%.
Loan term
The same $300 fee spread over 5 years gives 7.27%; squeezed into 1 year it gives 11.74%. Short loans show the largest gap between APR and stated rate.
Fee as a share of the loan
A $300 fee on $20,000 gives 7.02%, the same as a $150 fee on $10,000, because both fees are 1.5% of the amount. The fee percentage, not its dollar size, sets the APR.

Questions

Is APR the same as the interest rate?

No. APR is intended to reflect a broader borrowing cost, including certain fees, while the interest rate describes the interest charge itself.

Why can my lender's APR differ?

Regulated calculations can use different fee rules, timing, rounding, and assumptions. Compare the result with the lender's written disclosure.

Does this include every fee?

No. The model includes only the upfront fee amount you enter. Check the written disclosure for other charges and the applicable APR method.

How is APR calculated?

The calculation finds the interest rate at which the scheduled payments are worth exactly the amount of money received after fees. That monthly rate is then multiplied by 12. In the example, 36 payments of $304.22 against $9,700 received give 0.6714% a month, or 8.06% a year. Solving requires trial and error or a financial calculator because the rate cannot be isolated algebraically.

Is a lower APR always the cheaper loan?

Not always. APR assumes the loan is held to the end. A loan with a lower rate and a higher upfront fee can show a lower APR but cost more if it is repaid or refinanced early. APR also does not reflect the term: a longer loan can have a lower APR and still cost more interest in dollars. The loan comparison calculator shows total cost directly.

More in Loans & debt

Sources

These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.