APR Calculator
Calculate real Annual Percentage Rate (APR) by including upfront loan fees and discount points into borrowing costs.
APR Result
Frequently asked questions
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal amount, while APR includes interest plus lender fees and points expressed as an annual rate.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. APR adds lender fees, points and certain closing costs, expressed as an annualised rate, so it reflects the true cost of the loan. Two loans with the same interest rate can have very different APRs if one carries heavy origination fees.
Why is my APR higher than my quoted rate?
Because the fees are amortised into the rate. A mortgage with a 6% rate and $4,000 in fees might carry an APR near 6.2%. If the APR and the rate are identical, the loan has essentially no fees - which is worth verifying rather than assuming.
Is the lowest APR always the best deal?
Not necessarily. APR assumes you hold the loan to term, so a low-rate, high-fee loan looks good on APR but loses if you refinance or sell in five years. Compare total cost over your realistic holding period. APR also handles variable-rate and interest-only products poorly, since it must assume a rate path that may not happen.