APR Calculator
Find the true annual cost of a loan by including fees and interest.
What is APR?
The Annual Percentage Rate (APR) is the annual rate charged for borrowing ...
APR is different from your simple interest rate because it includes fees and closing costs. It provides a more accurate picture of the total cost of borrowing.
Why Calculated APR is Higher
If you take out a loan, the lender might say the interest rate is 5%, but if they charge a $500 origination fee, your effective rate (APR) is actually higher, because you received less money than you are paying back interest on.
Nominal vs Effective APR
- Nominal APR: Simple interest rate per year.
- Effective APR: Accounts for compounding within the year (checked by selecting monthly/daily compounding). This calculator focuses on the standard APR used in lending disclosures (Truth in Lending methodology).
Frequently Asked Questions
Is APR the same as interest rate?
No. Interest rate is the cost of borrowing the principal amount. APR is the broader cost including fees.