APR Calculator — Annual Percentage Rate
APR captures the real cost of a loan by folding in upfront fees as well as the stated interest rate. Enter the loan amount, nominal rate, term and fees to see the true APR, your monthly payment, and how the balance shrinks over time.
%
months
The true annualised cost of borrowing including upfront fees
- 1
Monthly interest rate
r = 6% ÷ 12 ÷ 100 = 0.005 - 2
Discount factor
1 − (1 + 0.005)^(−36) = 0.164355The present-value annuity factor used in the amortisation formula. - 3
Monthly payment
10,000 × 0.005 ÷ 0.164355 = 304.22
How does this calculator work?
APR is the annualised interest rate that makes the present value of all your payments equal the net loan proceeds (principal minus upfront fees). If a $10,000 loan at 6% nominal has $200 in fees, APR ≈ 7.4%. Enter loan details above to get the exact figure.
Formula
How this is calculated
The nominal (stated) interest rate on a loan covers only the cost of borrowing the principal. The Annual Percentage Rate (APR) is more comprehensive: it finds the single annualised rate that, when used to discount all your monthly payments back to today, equals the net amount you actually received (loan principal minus upfront fees). If fees are zero, APR equals the nominal rate; the moment fees appear, APR rises above it — sometimes substantially on short-term or heavily-fee-loaded loans.
This calculator first computes your monthly payment from the nominal rate using the standard amortisation formula, then uses a precise numerical search (bisection) to find the monthly rate at which the present value of those payments equals (principal − fees). Multiplying that monthly rate by 12 gives the APR. This is the methodology mandated by the US Truth in Lending Act (TILA) and the EU Consumer Credit Directive for most loan products.
Important limitations: the calculator assumes a fixed rate and equal monthly payments for the full term; it does not model variable rates, balloon payments, points rebates, or compounding fees. For mortgages with points, escrow, or lender credits, use a dedicated mortgage APR tool. The loan balance chart shows the standard amortisation schedule at the nominal rate — it illustrates how interest-heavy early payments are.
Frequently asked questions
APR spreads the upfront fees over the loan's life and converts them into an equivalent annual rate. A $200 fee on a 36-month $10,000 loan at 6% raises APR to roughly 7.4%, even though each monthly payment is identical — the fee effectively reduces the net proceeds, so your cost per dollar borrowed is higher.
Lower APR means lower total cost, all else equal. However, some low-APR loans achieve this with longer terms, meaning more total interest paid even at a lower rate. Compare both APR and total cost — particularly for loans where you might repay early.
The APR calculated here is a nominal annual rate (monthly rate × 12), not an effective annual rate (EAR). EAR accounts for within-year compounding; for monthly payment loans the difference is small. APR is a comparison standard — it lets you rank loan offers on equal terms.
Also known as
TG we-Calculate Editorial Team. (2026). APR Calculator — Annual Percentage Rate [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/apr-calculator
TG we-Calculate Editorial Team. "APR Calculator — Annual Percentage Rate." TG we-Calculate. 2026. https://we-calculate.com/calculator/apr-calculator.
TG we-Calculate Editorial Team, "APR Calculator — Annual Percentage Rate," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/apr-calculator
@misc{wecalculate_apr_calculator, title = {APR Calculator — Annual Percentage Rate}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/apr-calculator}}, year = {2026}, note = {TG we-Calculate} }
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