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Loan Calculators

APR Calculator

Calculate the true APR of a loan when origination fees, points, and other financed costs are included — the number that actually compares two offers.

APR is derived by solving for the rate that equates the scheduled payment to the cash actually disbursed — the same approach Regulation Z requires.

$
$
%
yr
Effective APR
6.695%
That's roughly 0.20% higher than the stated 6.5% rate once the $4,000 in fees are factored in.
Monthly payment
$1,264
Net cash disbursed
$196,000
Total paid (life of loan)
$455,089
Total finance charge
$259,089
Overview

How the APR Calculator Works

Interest rate and APR are not the same thing. APR (annual percentage rate) reflects the interest rate plus mandatory fees expressed as a yearly rate — it's the single most useful number for comparing two loan offers. This calculator solves for the APR given the loan amount, fees, nominal rate, and term.

Formula

The Math Behind the Calculator

Borrower receives (Loan amount − Fees) but pays the monthly payment computed on the full loan at the stated rate. The APR is the rate that, applied to the net amount disbursed, would produce the same monthly payment over the same number of months. Found by solving payment = (net × r) ÷ (1 − (1 + r)^−n) for r, then multiplying by 12 to annualize.

Example

A Worked Example

A $200,000, 30-year loan at 6.50% with $4,000 in origination fees has a monthly payment of about $1,264 on the full $200,000. Because you actually receive only $196,000, the effective APR is roughly 6.68% — about 0.18 percentage points higher than the quoted rate.

How to use

How to Use the APR Calculator

  1. 1Enter the loan amount as written on the loan estimate.
  2. 2Enter the total fees that are financed or paid upfront (origination, discount points, mortgage broker fees).
  3. 3Enter the nominal interest rate quoted by the lender and the term.
  4. 4Compare the APR across lenders — not the interest rate alone.
Interpretation

What the Results Mean

  • APR is the apples-to-apples comparison rate when fees differ between offers.
  • Total finance charge is what borrowing costs you in real dollars over the life of the loan.
  • A low rate with high fees can lose to a higher rate with no fees — APR makes that visible.
Avoid

Common Mistakes to Avoid

  • Comparing two loans by interest rate alone when one charges 1–2 points in fees.
  • Forgetting that APR assumes you keep the loan to maturity — if you'll refinance or sell in 3 years, fees hurt more than APR suggests.
  • Lumping non-loan fees (appraisal, title insurance) into the APR calculation when they're paid to third parties regardless of lender.
Keep going

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FAQ

Frequently Asked Questions

Why is APR higher than the interest rate?+

Because APR includes fees that the interest rate doesn't. If a loan has zero fees, APR and rate will match.

Is the lowest APR always best?+

Usually for long-held loans, yes. For short-held loans (you'll refinance or sell soon), a higher rate with lower fees can win because you don't amortize the fees long enough to benefit.

Does APR include private mortgage insurance?+

Federal disclosures include PMI in mortgage APR until it's scheduled to cancel. Our calculator focuses on the fee-only APR for clarity — add PMI separately if you want the all-in number.

Financial Disclaimer

This calculator is for educational and estimation purposes only. It does not provide financial, mortgage, tax, investment, or legal advice. Actual rates, payments, taxes, fees, insurance costs, eligibility, and loan terms vary by lender, location, credit profile, and market conditions. Always compare official offers and consult a qualified professional before making financial decisions.

Last updated June 2026 · Prepared by the mCalculator Editorial Team