APR Calculator

Interest rate vs. APR — what's the difference?

The interest rate is the cost of borrowing the money, expressed as a percentage. The APR (Annual Percentage Rate) includes the interest rate plus upfront fees like origination fees, points, and broker charges — spread across the life of the loan. APR is the number to use when comparing loans, because it reflects your true cost of borrowing.

How this calculator works

Enter the loan amount, any upfront fees, the lender's stated interest rate, and the loan term. The calculator determines the equivalent interest rate that, applied to the net amount you actually receive (loan minus fees), produces the same monthly payment. That equivalent rate is your true APR.

A real-world example

A $10,000 personal loan advertised at "6% interest" with a $500 origination fee sounds reasonable. But that $500 fee means you only receive $9,500 — and you're paying interest on the full $10,000. The result? Your true APR is closer to 8.15%, not 6%. Always read the APR disclosure, not just the headline rate.

Common loan fees to watch

• Origination fee: 1%–8% of the loan (personal loans)
• Discount points: 1% each, paid upfront to lower your rate (mortgages)
• Broker fees: 1%–2% of loan amount
• Application / processing fees: flat fees, $50–$500

APR vs. APY

Don't confuse APR with APY (Annual Percentage Yield). APR is what you pay on a loan and doesn't include compounding. APY is what you earn on savings and does include compounding. A 12% APR loan with monthly compounding costs you the equivalent of ~12.68% APY over a year.