APR Calculator
The stated interest rate on a loan is not the rate you pay. APR rolls upfront and financed fees into a single number — the true cost of borrowing once the lender's add-ons are accounted for. The wider the gap between rate and APR, the more those fees actually cost you.
Principal balance you're borrowing.
Up to 40 years.
Stated annual rate before fees.
Points (upfront fees that buy down your rate), origination fee (lender's underwriting/processing charge), and other costs paid out of pocket.
Fees rolled into the loan balance instead of paid at closing.
Stated rate 6.000% · 10-yr term
6.563% Effective APR
- Principal
- $100,000
- Interest
- $33,225
- Fees
- $2,500
- Fee impact on APR
- +0.563%
- Monthly payment
- $1,110
- Total cost over loan
- $135,725
Free during pilot
How APR differs from the rate
We first build the monthly payment from the loan amount plus any financed fees, using the standard amortization formula at your stated rate. The effective APR is then the rate that makes the present value of those payments equal to the cash you actually walked away with — the loan amount minus your upfront fees.
Amount received = Σ [ Monthly payment / (1 + APR/12)^t ]
We solve for APR with Newton's method, iterating until the present value matches within one cent or 100 iterations elapse.
Why APR > rate
Upfront fees raise the APR because you receive less cash than the loan balance suggests. Financed fees raise the APR because the monthly payment is computed against a larger principal. The gap between APR and rate is the cleanest single-number summary of how expensive a lender's fees actually are over the term of the loan.
Frequently asked questions
What is APR, and how is it different from the interest rate?
The interest rate is the cost of borrowing the principal alone. APR (annual percentage rate) rolls upfront and financed fees into a single rate, so it reflects the true cost of the loan over its term. The wider the gap between the stated rate and the APR, the more the lender's fees are costing you.
How is APR calculated?
We build the monthly payment from the loan amount plus any financed fees at your stated rate, then solve for the rate that makes the present value of those payments equal the cash you actually received — the loan amount minus upfront fees. The solver uses Newton's method, iterating until the present value matches within one cent.
Why is APR usually higher than the interest rate?
Upfront fees raise APR because you receive less cash than the loan balance implies; financed fees raise it because the payment is computed against a larger principal. A loan with no fees has an APR equal to its stated rate.
Can I compare APRs between lenders directly?
Only when both offers include the same set of fees. The federal APR rule defines which charges count as prepaid finance charges; this calculator treats every dollar you enter as a finance charge, which can differ from the APR on a lender's Loan Estimate. Compare offers like-for-like.
Estimates only — not a TILA (Truth in Lending Act) disclosure. The federal APR Rule defines which fees are "prepaid finance charges" and which are not; this calculator treats every dollar you enter under upfront or financed fees as a finance charge, which may produce a different number than what appears on your Loan Estimate. Compare APRs only between offers that include the same set of fees. Methodology last reviewed: May 26, 2026.