APR Calculator
Convert a quoted interest rate plus upfront fees into the effective APR — the honest, comparable cost of borrowing. Enter the loan, the note rate, the term, and the fees; the calculator solves the rate that reflects what you actually received.
Effective APR
Example: $200,000 at 6% with $4,000 in fees over 30 years → 6.19% APR.
Rate versus APR, concretely
In the worked example — a $200,000 mortgage at a 6% note rate with $4,000 in upfront fees — the payment is computed on the full $200,000, but you effectively received only $196,000. The rate that reconciles those payments with the smaller amount is 6.19%: the fees quietly added 0.19 percentage points to the true cost. The engine solves this by bisection on the discounting equation, and the same tested code produced every number here.
Using APR to shop
Lenders must disclose an APR, but quotes bundle different fee sets, which muddies comparisons. Recomputing the APR yourself with a consistent fee basis — same fees counted on every offer — puts a 6.1%/low-fee loan and a 5.9%/high-fee loan on one honest scale. Pair it with the Refinance Calculator when the question is whether new fees are worth a lower rate on an existing loan.
Frequently asked questions
What exactly is APR?
The annual percentage rate expresses the total cost of borrowing — interest plus certain upfront fees — as one annual rate. Mechanically, it is the rate that discounts your actual payments back to the money you actually received (loan minus fees).
Which fees belong in an APR?
For mortgages: origination charges, discount points, and most lender fees; typically not appraisal or title costs paid to third parties (rules vary). For personal loans, the origination fee dominates. When comparing offers, include the same fee set on both sides.
Why does the same fee raise APR more on a shorter loan?
The fee is a fixed upfront cost spread over the loan’s life. Fewer years means fewer payments to absorb it, so its annualized impact is bigger — which is why paying points rarely makes sense if you may sell or refinance early.
Is a lower APR always the better offer?
It is the better single-number comparison, but check the horizon: APR assumes you keep the loan to term. If you expect to sell or refinance in a few years, a higher-rate/lower-fee loan can beat a lower-rate/high-fee one. Model both against your timeline.
Not financial advice: a general educational estimate. Regulatory APR definitions specify exactly which fees count and can differ from a simple all-fees calculation — the lender's formal disclosure governs. Values are processed locally in your browser and never transmitted. See the methodology page.