A walkthrough, end to end.
- 1
Enter the loan amount, quoted nominal interest rate, term, and total upfront fees (origination, points, etc.).
- 2
The calculator solves for the actual APR — the rate that, applied to (loan − fees), produces the same monthly payment.
- 3
Compare APRs across loan offers — APR is the true cost; nominal rate alone hides fees.
True APR (numerical solve)
APR is the discount rate that equates present value of all payments to (loan amount − fees) — the actual cash you receive. Solved by iterative root-finding (bisection method here) since there's no closed-form solution.
What you can do with this.
Comparing mortgage offers
Lender A: 7.0% rate, $4,000 fees. Lender B: 7.25%, $1,500 fees. Computing APR makes them comparable — typically Lender B (higher rate but lower fees) is cheaper for buyers staying under 7 years; Lender A wins for longer holds.
Discount points decision
Buying 1 point (1% of loan) typically lowers rate by 0.25%. APR captures this — compare APR with vs without points to see which scenario is truly cheaper for your hold period.
Auto loan APR
Quoted auto rates often exclude doc fees and add-ons. Compute APR with all fees included to compare dealer financing against credit union offers fairly.
Personal loan APR
Personal lenders often quote rate + origination fee separately. Federal lending laws require APR disclosure, but APR is what really matters — always compare on APR, not headline rate.
Credit card APR
Credit cards typically have zero origination fees, so APR ≈ stated rate. The exception: balance transfer fees (3–5%) push effective APR above the introductory rate when amortized over the intro period.
Mortgage rate vs APR gap
Typical gap: 0.10–0.30%. Larger gaps (0.4%+) signal high closing costs hidden behind a low headline rate. Always check both numbers in the Loan Estimate.
When APR misleads
APR assumes you hold the loan to term. Stays under 5 years can make a low-fee, higher-rate loan cheaper than a high-fee, lower-rate one even when the latter has 'better' APR.
APR calculator 2026 — what's current
TRID disclosure rules require lenders to provide APR on the standardized Loan Estimate. Use this calculator to verify the lender's APR matches your understanding of the fees.
Frequently asked.
Interest rate is just the cost of borrowing. APR includes fees and points spread over the loan term — it's the true annualized cost. Always compare on APR.
Because it includes fees. The bigger the gap, the more fees are baked in. A loan with 6.75% rate and 7.05% APR has typical fees; 7.05% rate and 7.55% APR has heavier fees.
Usually yes for hold periods longer than 5–7 years. For shorter holds, run the math both ways — lower fees can beat lower rate.
No. Calculations run entirely in your browser.