APR Calculator
Calculate the true effective APR of a loan once upfront fees are factored in, not just the nominal interest rate.
About the APR Calculator
The interest rate a lender advertises is not always the true cost of the loan — origination fees, points, and other upfront charges reduce the amount you actually receive while you still repay based on the full loan amount. APR (annual percentage rate) captures that real cost in a single comparable number, and this calculator computes it from your loan terms and fees.
How It Works
The calculator first computes the fixed monthly payment implied by your nominal rate and term. It then treats the amount you actually receive (loan amount minus fees) as the true amount financed, and searches for the interest rate that would make that smaller amount produce the same monthly payment — that rate is the effective APR, always equal to or higher than the nominal rate whenever fees are present.
APR solves: PV(APR, Payment, n) = Loan Amount − Fees, where Payment is computed from the nominal rate and PV is the present value of that payment stream at rate APR.
Example
Scenario: A $15,000 loan at a 7% nominal rate with $400 in upfront fees, over 5 years.
Result: Effective APR of roughly 7.6% — noticeably higher than the advertised 7% once the fees are factored into the real cost of borrowing.
Assumptions & Limitations
- Assumes all fees are paid upfront out of loan proceeds rather than financed separately.
- Uses an iterative numerical search to find the APR, matching the standard truth-in-lending approach lenders use.
- Does not include ongoing charges like annual fees, which some cards and lines of credit apply separately from APR.
- Best used to compare two loan offers with different fee structures, not as a legally binding disclosure figure.