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APR calculator

The rate on the offer isn't the full price. Add the fees and see the annual percentage rate you're really paying.

Origination, points, lender fees
APR
10.817%vs 9.500% interest rate: fees add 1.317%
Monthly payment
$525.05
You actually receive
$24,250
Total interest
$6,503
Total cost of credit
$7,253interest + fees

How APR is worked out

Fees deducted from the loan (or paid at closing) mean you get less money but repay the full amount. APR is the interest rate that describes that deal: the rate at which your actual monthly payment repays only what you received.

In the example, a $25,000 loan at 9.5% for 60 months costs $525.05 a month. Because a $750 fee leaves you with $24,250, the same payment implies an APR of 10.82%.

For mortgages, APR also includes some third-party charges, and lenders follow Regulation Z's detailed rules on which charges count, so a lender's disclosed APR may differ slightly. It remains the fastest way to rank offers, which is exactly what the loan comparison tool does.

Questions people ask

What is the difference between APR and interest rate?
The interest rate sets your payment. APR (annual percentage rate) folds upfront finance charges such as origination fees and points into a single yearly rate, so offers with different fees can be compared. The US Truth in Lending Act requires lenders to disclose APR.
How is APR calculated?
Take the monthly payment on the full loan amount at the note rate. Then find the rate at which that same payment would repay only the money you actually received (loan minus upfront fees). That rate, annualised, is the APR. This calculator solves it exactly.
Why is APR higher on short loans with the same fee?
The fee is spread over fewer years, so each year carries more of it. A $750 fee on a 2-year loan raises the APR far more than on a 30-year loan.
Is a lower APR always the better loan?
Usually for comparing like with like, but APR assumes you keep the loan to the end. If you might pay off early, a loan with lower fees and a slightly higher rate can be cheaper. Use the loan comparison tool with your expected payoff date.

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