APR Calculator
Compute the effective annual percentage rate on a fixed-payment loan, including origination fees. Uses the constant-payment N-ratio approximation so fees are amortized across the term.
Last updated: September 2026
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About this calculator
The advertised interest rate on a loan and its APR are usually different. The rate covers interest only; the APR bakes in origination fees, closing costs, and other required charges so borrowers can compare loans on a common footing. In the US, Regulation Z (the Truth in Lending Act's implementing regulation) requires lenders to disclose the APR at closing.
The exact APR is the rate that makes the present value of payments equal the amount financed (loan minus fees). That requires an iterative solve. This calculator uses the well-known constant-payment N-ratio approximation: APR ≈ (2 × payments-per-year × total-finance-charge) / (principal × (term + 1)). It agrees with the exact iterative APR to within a few basis points for typical consumer loans (rates under 15%, terms 12–360 months) and is the standard classroom formula.
Total finance charge = monthly payment × term − loan amount + fees. That is what the borrower pays over and above principal. Amortizing it over the term and dividing by the average outstanding balance ((term + 1)/2) gives the annualized rate.
How to use
Example — a $10 000 personal loan, 5-year term, $200/month, $300 origination fee. Enter loanAmount = 10 000, monthlyPayment = 200, term = 60, fees = 300. Total finance charge = 200 × 60 − 10 000 + 300 = 12 000 − 10 000 + 300 = $2 300. APR ≈ (2 × 12 × 2 300) / (10 000 × 61) × 100 = 55 200 / 610 000 × 100 ≈ 9.05%. Compare to the nominal rate: at $200/month for 60 months on $10 000, the raw interest-only rate is about 7.4%. The 1.65-point APR premium comes from the $300 fee being spread over 5 years.
Frequently asked questions
How does APR differ from the interest rate?
The interest rate is the cost of borrowing before fees; the APR is the cost after fees are amortized across the term. On short loans, the APR gap can be large (a $500 fee on a $2 000 6-month loan adds ~50 percentage points). On long mortgages, the gap is usually 0.1–0.3 percentage points because the fee is spread over 30 years.
Is this the exact APR my lender will disclose?
It is a close approximation, not the regulatory number. Lenders must use the actuarial method in Regulation Z Appendix J, which solves iteratively for the exact rate. The N-ratio approximation used here is within ~10 basis points of the actuarial APR for typical consumer loans; for the disclosed number, ask the lender or run the exact solve.
What counts as a 'finance charge'?
Under Reg Z, the finance charge is anything the borrower pays that would not be required in a cash transaction: interest, points, origination fees, private mortgage insurance, guarantee fees. It excludes appraisal fees, title insurance, and other services the borrower could procure independently. Enter only the required-to-close fees in the fees field.
How do I compare two loan offers with different APRs?
The lower APR is cheaper over the full term, assuming you hold the loan to maturity. If you plan to pay it off early (mortgage refi, sold the car), a low-rate/high-fee loan can be worse: fees are paid upfront and never recovered. For that scenario, compute total cost over your actual holding period; the loan-payment tool at /en/calculators/financial/loan-payment/ helps.