APR Calculator

Calculate the true Annual Percentage Rate (APR) of your loan including fees. Compare loan offers accurately with our free APR calculator.

APR Results

APR

6.695%

Annual Percentage Rate

Interest Rate

6.500%

Nominal rate

APR vs Rate Diff+0.195%
Monthly Payment$1,580
Total Interest$318,861
Total Cost$323,861

Loan Details

10,0001,000,000
%
115
years
020,000

APR vs Interest Rate

Interest Rate

6.50%

Nominal rate

APR

6.70%

True cost of borrowing

The APR is 0.195% higher than the nominal interest rate. This difference represents the impact of $5,000 in fees spread over your 30-year loan.

Total Loan Cost Breakdown

Principal

$250,000

Interest

$318,861

Fees

$5,000

Loan Summary

Loan Amount$250,000
Monthly Payment$1,580
Number of Payments360
Total of Payments$568,861
Total Interest Paid$318,861
Total Fees Paid$5,000
Total Cost of Loan$323,861

How APR is Calculated

APR Definition:

APR is the rate that makes the present value of all monthly payments equal to the loan amount minus upfront fees. It's solved using iterative methods.

Present Value Equation:

Loan - Fees = Σ (Payment / (1 + APR/12)^t)

Where t = 1 to 360 (number of monthly payments)

Your Loan:

With $250,000 loan, 6.5% rate, and $5,000 in fees, your effective borrowing is $245,000, resulting in an APR of 6.695%.

Impact of Fees on APR

FeesAPRDifferenceTotal Cost
$06.500%+0.000%$318,861
$2,5006.597%+0.097%$321,361
$5,0006.695%+0.195%$323,861
$7,5006.795%+0.295%$326,361
$10,0006.897%+0.397%$328,861

Base interest rate: 6.5% | Loan term: 30 years

Quick Answer

APR (Annual Percentage Rate) represents the true yearly cost of borrowing, including interest rate plus fees. Unlike the interest rate alone, APR includes origination fees, points, and other costs. Use our APR calculator at practicalwebtools.com to compare loan offers accurately - a lower interest rate with high fees can have a higher APR than a higher rate with low fees.

Key Facts

  • APR includes interest rate plus fees (origination, points, closing costs)
  • Lenders are required by law (TILA) to disclose APR
  • APR allows accurate comparison of different loan offers
  • A loan with lower interest but higher fees may have higher APR
  • Mortgage APR includes discount points, origination fees, and PMI
  • Credit card APR is the annualized interest rate (usually no additional fees)
  • Effective APR accounts for compounding within the year

Frequently Asked Questions

APR is the total yearly cost of borrowing, including interest and fees, expressed as a percentage. Unlike the nominal interest rate, APR includes origination fees, closing costs, and other charges, giving a more accurate picture of the loan's true cost.
Interest rate is just the cost of borrowing the principal. APR includes the interest rate PLUS fees (origination, closing costs, etc.) spread over the loan term. APR is always equal to or higher than the interest rate. Use APR to compare loan offers.
APR typically includes: origination fees, discount points, mortgage insurance, closing costs, broker fees, and other lender charges. It usually excludes: title fees, appraisal fees, and other third-party costs. Requirements vary by lender and loan type.
A "good" APR depends on loan type, credit score, and market conditions. For mortgages: 6-7% (2024). Credit cards: under 15% is good. Auto loans: under 5% is excellent. Always compare APRs from multiple lenders to find the best rate.
Not always. Consider: loan term (shorter terms have lower total cost), your break-even point (if refinancing), prepayment penalties, and loan flexibility. A slightly higher APR with no prepayment penalty might be better if you plan to pay off early.