What does APR Calculator do?
APR calculator that folds origination fees and points into one annual rate. Shows the amount financed, finance charge and payment, Truth in Lending style.
- Price
- Free
- Account
- Not required
- Processing
- Entirely in your browser; your data and files are not uploaded
- Works on
- Any modern browser on desktop, tablet or phone
- Category
- Financial Calculators
How to use the apr calculator
- Enter the loan amount, the interest rate (note rate) and the term.
- Enter the fees that count as finance charges, such as origination fees and points.
- Say whether those fees are paid at closing (or deducted from the loan) or added to the loan balance.
- Read the estimated APR, the amount financed, the finance charge and the total of payments.
Worked example
$200,000 at 6.5% for 30 years with $4,000 of fees paid at closing
The monthly payment is $1,264.14. The amount financed is $200,000 − $4,000 = $196,000, so the APR is the rate at which 360 payments of $1,264.14 repay $196,000: about 6.695%, almost 0.2 percentage points above the note rate. The total of payments is $455,085.82 and the finance charge (interest plus fees) is $259,085.82.
How it works
Following the US Truth in Lending approach (Regulation Z), the amount financed is the loan amount minus prepaid finance charges, or the amount you requested when the fees are added to the balance. The APR is the annual rate 12 × i where i solves Σ payment ÷ (1 + i)t = amount financed over all monthly payments (the actuarial method), found with Newton’s method and a bisection fallback. Finance charge = total of payments − amount financed.
Assumptions
- Fixed rate and equal monthly payments, with the first payment one month after the loan starts.
- You decide which fees are finance charges. Under 12 CFR 1026.4, loan fees and points usually are; on home loans, fees such as title, appraisal and credit report fees are usually excluded.
- Mortgage insurance, odd first periods and other irregularities that a lender’s APR includes are not modelled.
Frequently asked questions
What is the difference between APR and interest rate?
The interest rate sets your payment. The APR also counts the fees you pay to get the loan, spread over the term, so it is higher whenever there are fees. Comparing APRs helps when offers have different rates and fees.
Why might my lender’s APR differ?
Lenders calculate the disclosed APR under Regulation Z, including charges you may not have entered (such as mortgage insurance) and exact payment dates. A disclosed APR is treated as accurate within 1/8 of a percentage point for regular loans.
Does paying off early change the APR?
The APR assumes you keep the loan for the full term. If you repay early, upfront fees are spread over fewer years, so your real cost per year is higher than the APR.
Limitations
- An estimate for comparison, not a legal APR disclosure.
- Monthly payments only; does not model adjustable rates or balloon payments.