APR Calculator - Calculate Annual Percentage Rate
Free APR calculator to determine annual percentage rate and APY with fees and compounding effects for accurate loan comparison
APR Calculator
Results
What is an APR Calculator?
An APR Calculator is a free financial tool that helps you determine the true annual cost of a loan by calculating the Annual Percentage Rate (APR). Unlike simple interest rates, APR includes all fees and costs associated with borrowing, giving you a complete picture of what you'll actually pay.
This calculator works for:
- Loan Comparison - Compare different loan offers including fees and interest
- Mortgage Analysis - Understand the true cost of home loans with closing costs
- Auto Financing - Calculate the real rate on car loans with origination fees
- Personal Loans - Evaluate personal loan offers with processing fees
Interest Rate Calculator - Calculate effective interest rates from any loan
Loan Calculator - Determine monthly payments for various loan types
Mortgage Calculator - Calculate home loan payments with taxes and insurance
Personal Loan Calculator - Evaluate personal loan terms and payments
Credit Cards Payoff Calculator - Determine payoff time for credit card balances
How the APR Calculator Works
The calculation uses these formulas to determine APR and APY:
APR Formula:
APR = ((Fees + Interest) / Loan Amount / Term in Years) × 100
APY Formula:
APY = ((1 + APR/100/n)^n - 1) × 100
Where:
- Total Paid = Monthly Payment × Loan Term (months)
- Interest = Total Paid - Loan Amount
- n = Compounding periods per year
- Total Cost = Total Paid + Fees
- Effective Rate = ((Total Cost - Loan Amount) / Loan Amount / Years) × 100
Key APR Concepts
APR
Annual Percentage Rate includes interest rate plus all loan fees and costs, expressed as a yearly rate.
APY
Annual Percentage Yield accounts for compound interest effects, always higher than APR with frequent compounding.
Compounding
The frequency at which interest is calculated and added to the principal, affecting the total cost.
Effective Rate
The true annual cost including all fees and interest, useful for comparing different loan terms.
Loan Fees
Upfront costs including origination fees, closing costs, processing fees, and other charges.
How to Use This Calculator
Enter Loan Amount
Input the principal amount you're borrowing (e.g., $10,000)
Set Loan Term
Specify the repayment period in months (e.g., 60 months)
Enter Monthly Payment
Input your monthly payment amount (e.g., $188.71)
Add Loan Fees
Include all upfront costs and fees (e.g., $200)
Select Compounding
Choose how often interest compounds (monthly is standard)
View Results
See APR, APY, total cost, and effective interest rate
Benefits of Using This Calculator
- • True Cost Comparison: Compare loans accurately by including all fees and costs, not just interest rates.
- • Avoid Hidden Costs: Identify loans with high fees that may have deceptively low advertised rates.
- • Better Decisions: Make informed borrowing decisions by understanding the complete financial picture.
- • Savings Potential: Save money by choosing loans with lower APR, even if nominal rates appear similar.
- • Understand Compounding: See how different compounding frequencies affect your total loan cost.
Factors That Affect APR
1. Loan Fees
Origination fees, closing costs, and processing charges significantly impact APR. Higher fees mean higher APR even with the same interest rate.
2. Interest Rate
The nominal interest rate is the foundation of APR. Even small rate differences can compound to substantial cost variations over time.
3. Loan Term
Longer loan terms spread fees over more time, potentially lowering APR but increasing total interest paid over the life of the loan.
4. Compounding Frequency
More frequent compounding (monthly vs. annually) increases APY and the effective cost of borrowing, though APR remains constant.
Frequently Asked Questions (FAQ)
Q: What's the difference between APR and APY?
A: APR (Annual Percentage Rate) is the annual cost of borrowing including fees, while APY (Annual Percentage Yield) accounts for compound interest effects. APY is always higher than APR when interest compounds more than once per year.
Q: What's included in the APR calculation?
A: APR includes the interest rate plus additional costs like origination fees, closing costs, processing fees, and other charges associated with obtaining the loan. It provides a more accurate picture of the total cost than the interest rate alone.
Q: How can I use APR to compare different loans?
A: APR allows you to compare loans with different interest rates, fees, and terms on an equal basis. The loan with the lower APR is generally the better deal, assuming all other factors are equal.
Q: Is this calculator accurate for all loan types?
A: This calculator provides accurate APR estimates for most fixed-rate loans. However, variable-rate loans, credit cards with fluctuating rates, and loans with balloon payments may require specialized calculations.