# APR Calculator

Calculate the true APR on any loan including fees and closing costs. Compare loan offers accurately with our free APR calculator.

## What this calculates

Calculate the true Annual Percentage Rate on any loan by including upfront fees and closing costs. Compare loan offers side by side to find the best deal based on the total cost of borrowing, not just the stated interest rate.

## Inputs

- **Loan Amount** ($) — min 0 — The total amount you are borrowing.
- **Stated Interest Rate** (%) — min 0, max 50 — The nominal annual interest rate on the loan.
- **Total Loan Fees** ($) — min 0 — All upfront fees (origination, closing costs, etc.).
- **Loan Term (months)** — min 1, max 480 — The length of the loan in months.

## Outputs

- **Annual Percentage Rate (APR)** — formatted as percentage — The true annual cost of the loan including fees.
- **Monthly Payment** — formatted as currency — Your monthly payment based on the stated rate.
- **Total Interest Paid** — formatted as currency — The total interest paid over the life of the loan.
- **Total Cost of Loan** — formatted as currency — Total of all payments plus fees.

## Details

The Annual Percentage Rate (APR) represents the true annual cost of borrowing money, expressed as a percentage. Unlike the stated interest rate, APR includes origination fees, closing costs, and other charges that add to the cost of the loan. The Truth in Lending Act (TILA) requires lenders to disclose the APR so borrowers can compare offers on equal footing.

APR is calculated by finding the interest rate that would produce the same monthly payment on the net loan amount (principal minus fees) as the stated rate produces on the full principal. This is why APR is always equal to or higher than the stated rate -- the fees effectively increase the cost of borrowing.

When comparing loan offers, always use APR rather than the stated interest rate. A loan with a lower interest rate but high fees may have a higher APR than a loan with a slightly higher rate but lower fees. However, keep in mind that APR assumes you keep the loan for its full term. If you plan to refinance or pay off early, a loan with lower fees and a slightly higher rate may cost less overall.

## Frequently Asked Questions

**Q: What is the difference between APR and interest rate?**

A: The interest rate is the annual cost of borrowing the principal amount only, without considering fees. The APR includes the interest rate plus all mandatory loan fees (origination fees, closing costs, mortgage insurance, etc.) spread over the loan term. APR gives you the true cost of borrowing and is always equal to or higher than the stated interest rate. Use APR when comparing loan offers from different lenders.

**Q: Why is my APR higher than my interest rate?**

A: Your APR is higher because it accounts for fees that the interest rate alone does not capture. These fees -- such as origination charges, discount points, closing costs, and private mortgage insurance -- increase the effective cost of your loan. The larger the fees relative to the loan amount, the bigger the gap between your interest rate and APR.

**Q: What fees are included in APR?**

A: APR typically includes origination fees, discount points, mortgage broker fees, closing costs, and certain prepaid finance charges. It generally does not include appraisal fees, title insurance, or attorney fees, though this varies by lender. The specific fees included in APR are regulated by TILA and Regulation Z. Always ask your lender for a complete breakdown of what is included.

**Q: Is a lower APR always better?**

A: Usually, but not always. APR assumes you keep the loan for its entire term. If you plan to sell or refinance within a few years, a loan with higher fees (lower rate, higher APR) may not save you enough in monthly interest to offset the upfront costs. In that case, a loan with a higher APR but lower fees might actually cost less overall for your specific situation.

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Source: https://vastcalc.com/calculators/finance/apr
Category: Finance
Last updated: 2026-04-21