APR Calculator – Estimate Annual Percentage Rate
Estimate the annual percentage rate (APR) of a loan including fees and points.
About the APR Calculator
What is the APR Calculator?
An APR calculator estimates the annual percentage rate: the nominal interest rate adjusted for fees and points, which reflects the true cost of borrowing.
Why use this calculator?
Two loans with the same interest rate can have very different costs once fees are included. The APR lets you compare them on a single, honest number.
How to use it
- Enter the loan amount and nominal interest rate.
- Enter the term.
- Add all up-front fees and points.
- The APR is shown next to the nominal rate for comparison.
Formula
APR is the rate that makes the present value of payments equal the net amount received (loan minus fees).
The exact legal APR definition varies by country and by loan type.
Frequently Asked Questions
Why is APR higher than the interest rate?
Because fees and points reduce the amount you actually receive while the payments stay the same, so the effective annual cost rises above the quoted rate.
Is a lower APR always better?
Usually, for the same term and amount. But compare the total cost too, especially if you may sell or refinance early, when up-front fees hurt more.
What is the difference between principal and interest?
The principal is the amount you borrow. Interest is the fee charged for borrowing it, shown either as an annual rate (APR) or a periodic rate. Early payments go mostly toward interest; later payments go mostly toward principal.
How does the loan term affect my payment?
A longer term lowers the monthly payment but increases the total interest you pay over the life of the loan. A shorter term raises the monthly payment but costs less overall.
What is an amortization schedule?
It is a table that breaks every payment into its principal and interest portions and shows the remaining balance after each payment.
Should I make extra payments?
Extra payments reduce principal directly, which shortens the loan and cuts total interest. Many loans have no prepayment penalty, but check your agreement first.
What is APR and how is it different from the interest rate?
The interest rate applies only to the balance. The APR (annual percentage rate) also includes fees and points, so it reflects the true yearly cost of the loan.
What is included in a monthly mortgage payment?
Most payments combine principal, interest, property taxes and homeowners insurance (often called PITI). Some loans also include private mortgage insurance (PMI).
What is PMI and when can I drop it?
Private mortgage insurance is usually required when your down payment is under 20%. You can typically request removal once you reach 20% equity.
Fixed versus adjustable rate — which is better?
A fixed rate keeps the same interest rate for the whole term, giving predictable payments. An adjustable rate starts lower but can rise after the initial period.