🧾 APR Calculator
Work out the real annual percentage rate (APR) of a loan once upfront fees are included, so you can compare offers fairly.
Quick answer: A $20,000 loan at 7% for 60 months with $1,000 in upfront fees has a monthly payment of $396.02 and a true APR of 9.17%, because you only receive $19,000 but repay as if you borrowed $20,000.
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APR Calculator inputs
Result
Annual percentage rate (APR)
9.17%
vs. 7% stated interest rate
| Monthly payment | $396.02 |
| Total interest | $3,761.44 |
| Upfront fees | $1,000.00 |
| Total cost of borrowing | $4,761.44 |
- Cash you actually receive
- $19,000.00
- Loan term
- 5 years
- Fees add
- 2.17% to the rate
What APR measures
Lenders advertise an interest rate, but many also charge upfront fees that are deducted from the loan or paid at closing. The annual percentage rate folds those fees into a single yearly rate, so a low-rate loan with big fees can be compared with a higher-rate loan without fees.
Payment = L × r(1+r)n ÷ ((1+r)n − 1) · find APR so that (L − Fees) is repaid by the same payment
The calculator first computes the payment on the full loan amount L at the stated rate. It then searches (by bisection) for the monthly rate at which the cash you actually receive, L − Fees, would be repaid by that same payment over n months. APR = that monthly rate × 12.
Worked example
You borrow $20,000 at 7% for 60 months and pay a $1,000 origination fee. The payment is $396.02. Because you only receive $19,000, the effective rate on that money is 9.17% – more than 2 points above the advertised rate. Total interest is $3,761.44, and the full cost of borrowing including the fee is $4,761.44.
How the fee changes APR ($20,000, 7%, 60 months)
| Upfront fee | Approx. APR |
|---|---|
| $0 | 7.00% |
| $400 (2%) | 7.85% |
| $1,000 (5%) | 9.17% |
| $1,600 (8%) | 10.56% |
Tips for comparing loans
- Always compare APRs for the same loan amount and term.
- If you will repay early, fees weigh even more heavily than the APR suggests.
- Ask lenders for a breakdown of every fee included in their quoted APR.
Estimates for educational purposes, not financial advice.
Frequently asked questions
What is the difference between APR and interest rate?
The interest rate sets your payment. The APR also counts upfront finance charges such as origination fees and points, expressing the total cost as a yearly rate. APR is always equal to or higher than the interest rate.
How is APR calculated?
Find the rate at which the amount you actually receive (loan minus fees) is exactly repaid by the scheduled payments. There is no closed-form formula, so the calculator solves for it numerically.
Why do fees matter more on short loans?
The same fee is spread over fewer payments. $1,000 of fees on a 5-year $20,000 loan adds about 2.2 points to the APR, but on a 30-year mortgage a similar percentage fee adds much less.
Which fees are included in APR?
Lender-charged finance fees: origination, underwriting, processing, discount points and mortgage broker fees. Third-party costs such as appraisals, title insurance and recording fees are usually excluded.