APR Calculator
Calculate the Annual Percentage Rate (APR) of your loan including all fees. Compare the true cost of different loan offers.
Annual Percentage Rate (APR)
8.79%
+1.29% above stated rate
Monthly Payment
$500.95
Total Fees
$750.00
Understanding APR vs Interest Rate
The interest rate is the cost of borrowing the principal loan amount. It does not include:
- Origination fees
- Closing costs
- Discount points
- Other lender fees
APR represents the true annual cost of borrowing, including:
- Interest rate
- Origination fees
- Closing costs
- Other required fees
Why APR Matters
When comparing loan offers, the APR gives you a more accurate picture of the total cost. A loan with a lower interest rate but higher fees might actually cost more than a loan with a higher interest rate and lower fees. Always compare APRs to find the best deal.
Frequently Asked Questions
APR vs Interest Rate: TILA Disclosure Requirements
The Annual Percentage Rate (APR) represents the true annual cost of borrowing, including interest and most mandatory fees. The Truth in Lending Act (TILA), enacted in 1968 and enforced by the Consumer Financial Protection Bureau (CFPB), requires lenders to disclose APR on all consumer loan products. This standardized disclosure allows borrowers to compare offers from different lenders on an apples-to-apples basis.
The stated interest rate (also called the note rate) reflects only the cost of borrowing the principal. APR adds origination fees, discount points, mortgage insurance premiums, and certain closing costs to the calculation. On a $300,000 mortgage at 6.5% with $6,000 in fees, the APR might be 6.72% — the 0.22% difference represents the fee impact spread over the loan term. A larger fee-to-loan ratio or shorter loan term produces a wider gap between rate and APR.
| Loan Offer | Interest Rate | Fees | APR | Monthly Payment |
|---|---|---|---|---|
| Lender A | 6.50% | $3,000 | 6.59% | $1,896 |
| Lender B | 6.25% | $8,000 | 6.49% | $1,847 |
| Lender C | 6.75% | $1,000 | 6.79% | $1,946 |
In the example above, Lender B has the lowest APR (6.49%) despite not having the lowest interest rate, because the combination of rate and fees produces the best overall cost. Lender A's higher rate with moderate fees lands in the middle. Lender C's low fees do not offset its highest rate.
APR vs APY: Credit Card APR Types and Calculations
APR (Annual Percentage Rate) does not account for compounding — it is a simple annual rate. APY (Annual Percentage Yield) includes the effect of compounding and is always equal to or higher than APR. The formula to convert: APY = (1 + APR/n)^n - 1, where n is the number of compounding periods. A credit card with 22.99% APR compounded daily has an effective APY of 25.85%.
Credit cards carry multiple APR types: Purchase APR (standard rate for new transactions, averaging 20-24% in 2026), Cash Advance APR (typically 25-29%, with no grace period), Balance Transfer APR (promotional 0% for 12-21 months, then standard rate), and Penalty APR (up to 29.99%, triggered by payments 60+ days late). The CARD Act of 2009 requires credit card issuers to apply payments above the minimum to the highest-rate balance first.
| APR Type | Typical Range (2026) | When It Applies |
|---|---|---|
| Purchase APR | 19.99% - 28.99% | Regular purchases after grace period |
| Cash Advance APR | 25.99% - 29.99% | ATM withdrawals, cash equivalents |
| Balance Transfer APR | 0% (promo) / 19.99%+ | Transferred balances from other cards |
| Penalty APR | Up to 29.99% | 60+ days late on payment |
Comparing Loan Offers Using APR: Mortgages, Auto, and Personal Loans
Mortgage APR includes points, origination fees, mortgage insurance, and most closing costs. A key nuance: APR assumes you keep the loan for its full term. If you refinance or sell within 5-7 years, a loan with lower fees but higher rate may cost less than a loan with low rate but high upfront fees. The break-even period is when total savings from the lower rate exceed the higher fees — typically 3-5 years for a 0.25% rate difference with $3,000 in additional fees.
Auto loan APR ranges from 5-7% for borrowers with excellent credit (750+) to 10-18% for subprime borrowers (below 620) on new vehicles. Used car rates run 1-3% higher. Dealer financing often includes a markup of 1-2% above the buy rate from the lending institution — always compare dealer APR against a pre-approved rate from your bank or credit union.
Personal loan APR ranges from 6-36% depending on creditworthiness. Excellent credit (720+) qualifies for 6-12%. Good credit (690-719) sees 12-18%. Fair credit (630-689) typically means 18-25%. Any personal loan APR above 20% should prompt consideration of alternatives: a credit union personal loan, home equity line of credit (HELOC at 8-10%), or 0% balance transfer card. The CFPB considers APR above 36% to be predatory lending in most contexts.