APR Calculator (True Loan Cost)
A loan’s APR is its true yearly cost once fees and points are included — always at or above the quoted interest rate. Enter the loan, rate, fees and term to see the real APR.
Example: with Loan amount $300,000 · Interest (note) rate 6.5% · Fees & points $6,000 · Term 360 months → APR (true annual cost): 6.70%.
- Monthly payment$1,896.20
- Fees add0.20 points above the 6.5% note rate
- Fees & pointsPaid upfront — loan balance stays $300,000
Computed by the calculator below using its default values. Change any input to see your own numbers.
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Learn moreAPR vs interest rate
The interest rate is the cost of borrowing the principal; the APR also folds in fees, points and certain closing costs, spread across the loan term. Because APR includes those fees, it is always at least the note rate — and it is the number lenders must disclose (Truth in Lending Act) so you can compare offers fairly. Two loans with the same rate but different fees have different APRs.
How it’s calculated & sources
Points are converted to a dollar fee (points % × loan amount) and added to your fees & points dollar figure. If fees & points are paid upfront, your loan balance and payment are based on the full loan amount, and the combined fee is deducted from the amount net-financed for the APR solve. If fees & points are financed, that dollar amount is added to the balance you owe (raising the payment), while the amount net-financed stays at the original loan amount — so financed fees still raise the true APR above the note rate. We compute the monthly payment on that balance at the note rate, then solve for the rate that equates that payment to the net amount financed. That rate, annualized, is the APR.
Benchmark: APR is always ≥ the note rate; lenders must disclose it under the federal Truth in Lending Act so borrowers can compare like-for-like.
Results update as you type and are general estimates, not personalized advice. Verify with a professional.
Frequently asked questions
Why is APR higher than the interest rate?
Because it includes fees and points on top of interest, spread over the loan term. Higher fees mean a bigger gap.
Should I compare loans by rate or APR?
APR, for loans of the same term — it captures fees the rate hides. For very different terms, compare total cost too.
Does APR include everything?
It includes most lender fees and points but not every third-party cost. Read the loan estimate for the full breakdown.