APR Calculator

Calculate the true Annual Percentage Rate (APR) of a loan including interest and fees.

APR = ((Total Interest + Fees) / Loan Amount / Years) x 100
$10,000 loan at 5.5% for 5 years with $200 fees: Total paid = $11,493, APR = 5.9% (vs 5.5% interest rate)

What is the difference between APR and interest rate?

Interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate PLUS all fees (origination fees, closing costs, points, mortgage insurance). APR gives the true cost of borrowing. Example: 5% interest rate + $2,000 fees on $100,000 loan = 5.4% APR. Always compare APRs between lenders, not just interest rates.

Why is my APR higher than my interest rate?

APR is always higher because it includes fees. The difference depends on fees charged. Small difference (0.1-0.25%): Low fees, good deal. Large difference (0.5%+): High fees or points. For mortgages, typical difference is 0.125-0.25%. No-fee loans have APR equal to interest rate. Use APR to compare total cost across different loan offers.

What is a good APR for different loans?

Good APRs (2024, excellent credit): Mortgages 6-7%, Auto loans 5-7%, Personal loans 6-10%, Credit cards 15-20% (but avoid carrying balance). Poor credit adds 3-10%+ to these rates. 0% APR exists for short-term promotions (12-24 months) but requires excellent credit and often sacrifices other benefits.

How do points affect APR?

Mortgage points (1% of loan amount) reduce interest rate ~0.25% but increase APR if you don't keep loan long enough. Example: Pay $2,000 for 0.25% lower rate - breakeven at ~6-8 years. Staying less than breakeven? Points increase your APR. Staying longer? Points decrease APR. Only worth it if keeping mortgage 10+ years or rates are high.