Annual Percentage Rate (APR) Calculator

The APR (Annual Percentage Rate) reveals the true cost of a loan by including not just the interest rate but also fees, points, and other charges. Lenders must disclose APR by law because it gives you a more accurate picture than the interest rate alone. Use this calculator to compare loan offers side by side.

How to Use This Tool

Enter the base loan amount you are borrowing.
Enter the nominal annual interest rate offered by the lender.
Enter the loan term in years.
Enter discount points as a percentage of the loan (1 point = 1% of loan amount).
Enter any other closing fees (appraisal, origination, etc.).
Click Calculate to see the true APR and monthly payment.

The Formula

APR is found by solving for the rate that equates the loan amount (minus fees) to the present value of all future payments. This requires iterative calculation: Loan Amount = PMT x [1 - (1 + r)^-n] / r where PMT is the monthly payment, r is the monthly APR rate, and n is the number of payments.

Why It Matters

You are getting a $300,000 mortgage offer at 6.5% interest but the lender charges 2 points ($6,000) plus $3,000 in other fees. The advertised rate looks competitive but the APR reveals the true cost is 6.89%. Compare this offer against another lender with 6.75% rate and $0 fees to see which is cheaper.